NACIL to save $18 million annual interest costs with loan refinance
12 November 2007
New Delhi: The National Aviation Company of India Ltd (NACIL), the merged entity comprising of domestic carrier Indian and flag carrier Air India, will be breathing easy now, after having managed to refinance its Exim loan taken for the purchase of 17 Boeing aircraft. The refinancing is expected to help the merged entity save close to $1.5 million per month in interest payments, senior officials have said.
The company''s exposure for the 17 Boeing aircraft and two spare engines is estimated at around $1.4 billion. The savings would be made on the first tranche of 68 Boeing aircraft that Air India is to acquire before December next year.
According to the officials, NACIL was paying a very high interest for the loan, with bankers hiking rates every time the merged company sought a roll over. They said that there was even a period when the airline was being charged Libor plus 275 basis points. But now, thanks to the refinancing deal, almost 85 per cent of the loan will be available at sub-Libor rates.