A consortium of banks led by the State Bank of India (SBI) has rejected a debt-restructuring plan for troubled national carrier Air India, as they did not want equity stake in a loss-making airline.
State-owned Air India had proposed to convert 60 per cent its Rs16,000-crore ($4billion) debt into long-term loans and the rest as equity.
The 26-member consortium whose lead lenders include SBI, IDBI and Bank of Baroda, had, in November, given an in-principle nod for financial restructuring of the loss-making airline.
Air India, already hit by a combination of high operating cost, fierce price war combined with poor management has been further affected by high fuel costs.
Private carrier Kingfisher Airlines is also facing a similar debt-trap like Air India and is struggling to find a way out.
The government, however, has ruled out bailout for the ailing private carrier, which is struggling to repay creditors and even meet working capita requirements.
The government, however, is reported to have worked out a Rs33,000 crore funds for Air India in the 12th Plan, which ends in 2017.