Air India to refinance Rs5,000 crore debt: report
05 May 2010
National carrier Air India is planning to refinance debt worth Rs5,000 crore to either a cheaper dollar loan or a rupee bond, as it aims to save interest costs to steer itself towards profitability, a senior executive said today.
"The decision to refinance was taken in the last board meeting. A tender for refinancing will be put out by the end of May," the executive, who didn't want to be named, told Dow Jones Newswires. The loan was taken in 2009 to finance the purchase of 21 Airbus planes, he said.
Air India, which is wholly owned by the union government, has suffered losses since the 2007-08 financial year as it failed to derive profitable synergies from its merger with former state-run domestic carrier Indian Airlines.
The airline, like others in the industry, was also hit by the decline in air traffic in 2008 and early 2009, while being saddled with a $15 billion order for 111 aircraft placed by Indian Airlines with Boeing and Airbus in 2005.
Air India is estimated to have lost Rs5,400 crore in the fiscal year ended 31 March and is expected to remain loss-making for a few more years. Last fiscal, the Indian government injected Rs800 crore as equity to help shore up Air India's finances, and is expected to inject another Rs1,200 crore this fiscal.
The executive said Air India expects any dollar loan it takes to be backed either by the union government or an international export credit agency, which would help it secure interest rates less than 100 basis points above Libor.