Debt-ridden Air India seeks loans at home, abroad

As the government's plan to infuse Rs1,200 crore as additional equity in Air India takes shape, the national carrier is seeking $1.15 billion (Rs5,106 crore) from global banks to refinance a loan taken to fund the purchase of 21 Airbus SAS planes and related equipment.

The financially troubled airline is seeking to tap a global liquidity glut and has been encouraged by the response of international lenders to a previous tender that sought to raise $475 million.

At the same time, the airline might ask for another Rs2,000 crore from the government in the next financial year to repay its massive debt, official sources said on Sunday.

The airline would require Rs3,000-Rs 4,000 crore annually to pay off its debt, which is primarily on account of aircraft induction. The monthly interest burden on this count averages at Rs 200 crore, while the debt each month stands at about Rs300 crore, the sources said.

In this backdrop, the airline may ask for another tranche of Rs2,000 crore as equity some time in the next financial year, the sources said.

While the government infused Rs800 crore in the last fiscal, a note for consideration to the Cabinet Committee on Economic Affairs (CCEA) is being prepared by Civil Aviation Ministry for an additional infusion of Rs1,200 crore.