Air India to clear defaulted payments in a week
23 May 2011
Mumbai: Flag carrier Air India said Saturday it would clear defaulted interest payment on a Rs200 crore working capital loan it took from banks within a week. In a statement to media organisations the carrier said it had cleared most of the interest payments to banks, and the default portion would be cleared soon.
Senior officials from the airline said the company would also pay the penalty on the default. According to these sources, the company would try and fund payments through internal resources.
Officials clarified that the payment default was a consequence of huge revenue losses suffered by the airline due to a 10-day strike by the company's pilots which crippled the airline's domestic operations.
The badly struggling carrier hopes to improve its position somewhat, atleast as far as clearing debts and the interest accumulated thereon, once it is allowed to restructure its debt and reduce its payments burden.
If it is able to convert its short term loans amounting to Rs18,000 crore into long-term loans then it may save interest payments of around Rs600 crore.
The flag carrier is also looking forward to raise Rs5,500 crore through bonds which would help restructure its long-term debts.
Air India's cumulative interest payments add up to Rs3,200 crore per annum, including Rs1,800 crore for the purchase of 111 aircraft ordered since 2006.