Air India advanced Rs250 crore, beats default

Mumbai: Teetering on the edge of being declared a non-performing asset (NPA), badly struggling carrier Air India breathed a sigh of relief with the Government of India releasing Rs250 crore to enable it to pay its lenders and avoid default. This advance will allow it to clear a certain amount of outstanding interest on its loans and keep it from defaulting for three months in a row, which would automatically have classified the carrier's debt as a NPA on its banker's books.

The beleaguered state-owned airline is now expected to clear up arrears on Friday.

A senior airline official said AI was to clear outstanding interest on its loans to the tune of Rs170-200 crore to its 21 lenders by Sunday. This is interest accrued on a working capital loan of Rs22,000 crore.

The carrier is trying to convince the government about a restructuring plan that has been prepared by SBI Caps. It lenders include the State Bank of India, IDBI and ICICI Bank.

At its meeting on 18 July, a group of ministers (GoM) cleared a payment of Rs532 crore to Air India for VIP operations undertaken by it over a period of number of years. This was against an amount of Rs800 crore claimed by Air India.

However, this sum could not be cleared as it required parliamentary approval for there were no budgetary heads against which this payment could be made, the government claims.