Air India off the hook as banks advance working capital
03 Nov 2009
New Delhi: State-owned Air India got a breather when a consortium of banks agreed to advance it Rs500 crore as loan for working capital. The cash-strapped carrier will use the loan to pay salaries and allowances to its staff.
It has already been served notice by the pilots union to clear salary and related dues before 24 November or they will strike work. The airline has also declared it will strive to clear salary dues by 10 November.
With the loan it is likely that the debt-burdened carrier will meet its commitment.
The consortium of banks advancing the loan very likely comprised of SBI, IDBI Bank and Syndicate Bank, according to sources.
The government has agreed in-principle to support the carrier through the equity infusion route but has attached a rider that the airline must restructure itself to become a commercially viable entity, and not continue to be a drain on the national exchequer.
A ministerial panel on Air India is scheduled to meet on 12 November to arrive at a decision on fund infusion for the airline.
