1. Air India looks to raise $300 mn via ECBs

Air India looks to raise $300 mn via ECBs

The loan, which the airline wants as a direct loan at a fixed or floating interest rate linked to Libor, is guaranteed by the government

By: | Mumbai | Published: April 22, 2015 12:52 AM

National carrier Air India is looking to raise $300 million through external commercial borrowing (ECB) to meet working capital requirements, according to an airline tender document.

The loan, which the airline wants as a direct loan at a fixed or floating interest rate linked to Libor, is guaranteed by the government.

“The ECB borrowing would be mainly used to fund the airline’s aircraft stores, spare parts and engines required for the existing fleet,” a senior official of the airline told FE. The average maturity of loan would be three years while the last date for tender is April 27.

Senior Air India officials had earlier told FE the flag carrier, saddled with debt, is now struggling to meet working capital requirements as banks are unwilling to enhance its existing line of credit. The carrier, whose current working capital credit line falls between Rs 4,000 and Rs 6,000 crore, is looking to expand its long-haul operations, especially on routes such as North America, Australia and Europe.

This apart, Air India, which has several aircraft grounded due to maintenance issues and non-availability of spare parts, will look to address such issues after receiving the loan amount.

Air India, which is expected to cut its net loss by about a third to Rs 3,500 crore during FY16 as a result of a significant reduction in fuel costs and improvement in operating performance, also expects to post an operating profit of under Rs 10 crore during the fiscal.

“Banks must reconsider their decision and provide the necessary working capital and long-term capital requirements. The aviation industry today is on the path of recovery, with the drop in fuel prices and we expect to become operationally profitable from FY16,” another senior Air India official had told FE.

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Tags: Air India
  1. K
    Kunnan
    Apr 22, 2015 at 3:18 pm
    Government fund is not enough for them ? Try to operate flights to the best routing like Africa, more places in Europe and try to earn money instead of borrowing money from others. If it is not possible close down the company. Shameless management !!!
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