Friday, August 24, 2018

Air India seeks Rs 500 crore urgently to repay banks

Since the failed disinvestment attempt in May, the Maharajah has been scrambling for cash. The buzz earlier was that Air India had asked for a Rs 30,000 crore fund infusion plan - after the Civil Aviation Ministry reportedly sought Rs 11,000-crore bailout package for the beleaguered airline. But post rejection from the government, at least on the former, the national carrier is now in dire straits and in urgent need of a cash infusion.

According to The Economic Times, Air India is on the brink of defaulting on bank loan repayments, so the aviation ministry has sought Rs 500 crore from the finance ministry on an urgent basis. "A letter has been sent (to FinMin) to release the money in the interim so that payments can be made to banks," an aviation ministry official told the daily. In the current financial year, the airline has already received an equity infusion of Rs 650 crore up to June.

In addition to this aid sought from the North Block, the airline is raising a Rs 1,500 crore short-term loan from the Bank of Baroda. According to Air India officials, a large chunk of this bank loan will go towards servicing the airline's international liabilities, which are on sovereign guarantee, as well as salaries and other expenditure. So there won't be enough left over to meet bank liabilities. After all, the airline boasts a total debt of over Rs 48,000 crore and reportedly has to pay around Rs 4,000-5,000 crore as outgo interest per year.
23/08/18 Business Today

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