The civil aviation ministry has pushed the state-owned Air India?s case for restructuring of $2.3 billion long-term loan taken for aircraft acquisition. The proposed restructuring/refinancing would result in 3% reduction in interest rate.
Civil aviation secretary M Madhavan Nambiar has written to his counterpart in finance ministry to work out the formula for reworking the debt structure for the carrier. ?The ministry has asked for an urgent decision on the issue,? official sources told FE.
The lenders to Air India have currently got dual guarantee?sovereign guarantee from the government of India and also the aircraft. The airline wants to give either of the two guarantee while purchasing new aircraft and keep the other guarantee for further asset creation.
?There is a provision of redeployment of $2.6 billion and we would like to utilise that,? the airline CMD Arvind Jadhav said.
Air India has reported significant improvement in its financial health and is keen to expand its network to encash the double-digit growth in the domestic aviation sector. The airline currently operates a fleet of 137 aircraft.
The airline has reported an increase in its passenger revenue by Rs 850 crore during April-August period, up 24% over the corresponding period last year. Impressed by its performance the aviation ministry has requested the Cabinet to release Rs 1,200 crore to the airline for meeting its working capital requirements. ?The airline has increased its market share and giving tough competition to private carriers,? an official said.
Air India has an accumulated loss of over Rs 12,000 crore as on March 2010 mainly on account of high fuel price, underutilisation of resources, excess capacity in the market and irrational pricing.
