The flag career of airline of India Air India is seeking government nod to raise a Rs. 2,000 crores loan and refinance of $ 819-million (Rs.81.9 crores) aircraft debt to come out of the financial crisis. Air India registered a sharp loss of Rs 8,556 crore in the last financial year. Despite an increase in revenue and yields, Air India continues to bleed in the current fiscal.
The government guarantee for bridge loan to refinance of $ 819-million (Rs.81.9 crores) aircraft debt is going to expire on December 27 and the airline is seeking urgent intervention of government in the deal. The airlines was offered to refinance the $819 million bridge loan taken for acquiring six Boeing 787 and one Boeing 777 aircraft from a consortium of four banks.
Air India Chairman Ashwani Lohani has categorically signaled out of flight disruptions and possible invocation of government guarantee because of delays in fundraising and refinance of aircraft debt.
“The overall financial situation of the airline is grossly untenable and it may not be able to sustain physical operations in the absence of immediate government intervention and support,” Ashwani Lohani writes to the civil aviation.
“In case the current bridge financing loans of $819 million are not paid off, the lenders may call on the central guarantee in the next one week as they have to take action 15 days prior to the expiry of the guarantee,” Lohani said in his letter.
The financial crunch in the airlines has resulted into defaulting on statutory payments, delay in payment to vendors and service providers. Air India CMD took to social media to write about the financial distress the Indian career is facing currently. Lohani said in his Facebook post that the airline needs to survive before it is sold.
An official from civil aviation ministry said that Air India’s proposals for loan guarantee and loan refinancing have been forwarded to the finance ministry for approval.