Divestment-bound Air India seeks Rs1,160 cr loan to modify planes for VVIPs
11 December 2017
Debt-laden Air India is reported to be seeking fresh loan of Rs1,100 cores to finance modification of two new Boeing aircraft which will be used for ferrying VVIPs.
This is over and above the $535 million (Rs3, 460 cores) loan the airline had sought to finance the acquisition of three Boeing planes, including the two aircraft to be used for ferrying VVIPs.
Air India is to take delivery of three Boeing 777-300 ER aircraft in January 2018, and two of these will be used to carry the President, the vice-president and the prime minister.
Government-ownd Air India, which lost heavily in catering to political VIPs and VVIPs and has accumulated losses of over Rs50, 000 cores, is still cpmpelled to serve these VIPs.
Air India, which is on the divestment block, will be spending an estimated $180 million (about Rs1,160 core at current exchange rates), for ''modification in its (planes) interior configuration,'' according to an official document.
A tender document released by the national carrier said it would like to avail a bridge loan of up to $180 million to finance the cost of modification.
''Government of India has indicated that they would issue its guarantee for the financing cost of modification of the two B777-300 ER aircraft for a period of 12 months or less,'' the document issued last week said.
These planes will undergo re-configuration. The proposed loan amount will be availed during the period from January to April 2018. The first instalment of $135 million (Rs870 core) would be taken next month, while the remaining amount will be borrowed in a quantum of $15 million (Rs96 core) each in February, March and April, respectively.
According to the airline, no commitment fee would be paid to the lender for the $180 million loan. ''Prepayment/ short closure of the loan should be allowed without any extra cost to Air India as the loan would be repaid as soon as the funds are made available by Government of India,'' it added.
''The Indian Income Tax Act imposes withholding tax on interest payments to lenders outside India. The rate of withholding tax on interest payments will be considered in financial evaluation of the offers to determine the all-in cost of your offer,'' the document said.
Air India had, in 2006, placed orders with Boeing for 68 aircraft, which included 27 Dreamliners, 15 B777-300 ERs, eight B777-200 LRs and 18 B737-800s. Of these, it has already taken delivery of 65 planes.
Air India, which is being divested by the government, has a present fleet of 115 aircraft.