GoM recommends sovereign guarantee for Air India's debt

New Delhi: The Group of Minister's constituted to monitor state-owned Air India's turnaround has agreed to recommend sovereign guarantee for the financially beleaguered carrier's debt obligations. These have accumulated to Rs19,000 crore, the bulk of which are aircraft loan repayments.

The decision was taken in a recent meeting of the GoM chaired by finance minister Pranab Mukherjee.

According to airline officials, the panel has provided a commitment that the government will guarantee Air India's aircraft loan repayment obligations till 2020.

Civil aviation ministry sources said the GoM decision would be placed before the Cabinet for its approval.

Air India, including erstwhile Indian Airlines, had ordered 111 planes worth Rs44,000 crore in 2005.

The panel has also agreed to commit Rs450 crore a year over the next 10 years to Air India as a soft loan to meet working capital requirements.