Mumbai/New Delhi: Companies providing support services to airlines have initiated discussions with banks to raise debt under the modified Emergency Credit Line Guarantee Scheme (ECLGS).
On Sunday the government announced that companies in the civil aviation sector which are facing headwinds would be able to borrow up to Rs 200 crore of fresh loans under the scheme.
Aviation sector sources and bankers say that the expanded scheme could address the financing requirements of ancillary units in the civil aviation sector whose financing requirements are lower than those of airlines.
“Since ECLGS scheme has been made available to the civil aviation sector, we are evaluating the funding options and our team is in discussion with banks to understand the modified scheme. We will be able to take a call once we have more clarity on the terms. The sector should be given another round of bank moratorium,” said Murali Ramachandran, India CEO of Celebi Aviation which provides ground handling services to airlines at major airports.
“Our business is at 20 per cent of the pre-Covid level but our costhave reduced only marginally. We have not received any relief on airport charges, rent or interest payments and we still need to
service those with a substantially depleted revenue inflow,” he added.
A spokesperson of the Bird group which also provides ground handling services said business has been a challenge as it is operating at only 30 per cent of its pre-Covid capacity. “We haven’t opted for restructuring of our loans and shall consider the ECLGS scheme,” he added.
Domestic air traffic fell 27 per cent in April on a sequential basis and contracted further in May as states tightened Covid-19 restrictions and enforced lockdowns. Rating agency ICRA estimates that domestic traffic in May fell sequentially by around 65-67 per cent to 1.9-2 million.
Subodh Rai, chief ratings officer, CRISIL Ratings said “ It will take at least two quarters for demand to recover to January-March 2021 levels. The move to include civil aviation in the scheme will provide the sector much-needed liquidity support amid materially constrained cash generation ability due to several localized lockdowns.”
03/06/21 Aneesh Phadnis & Arindam Majumder/Business Standard
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