Banks clear Air India's restructuring plan

Mumbai, New Delhi: At their meet yesterday a consortium of bankers, led by the State Bank of India, cleared the financial restructuring plan for embattled state-owned carrier Air India. The move clears the path for the government to undertake measures designed to bail out the stricken national carrier.

Monday's meet was a follow up on orders issued by the country's central banker, the Reserve Bank of India, which cleared the restructuring proposal on Friday and asked the lenders and the airline to meet Monday.

Under the proposed restructuring plan the airline's debt would have an increased tenure of 15 years, up from 10 years earlier.

It is given to understand that the banks have cleared the restructuring proposal with the proviso the government invest cash into Air India. After the meet banking sources said they had been reassured by the government that a cabinet note would be produced in the next few days.

The consortium of lenders said the plan had received broad approval but they still had some regulatory issues to clarify with the central bank, which they hoped to do before the cabinet clears the bailout. The consortium, 13 banks in all, have about Rs26,000 crore of working capital loans outstanding with Air India.

The Air India board is due to meet in New Delhi on Tuesday to discuss the Rs20,000-crore debt recast and the sale and leaseback of 14 of the 27 Boeing 787 Dreamliners that are due to join the fleet by 2014.