A consortium of 19 banks led by the State Bank of India has approved the financial restructuring plan of debt-ridden national airline Air India Ltd, a news report said Sunday.
The plan involved the restructuring of 180 billion rupees (3.5 billion dollars) of debt by the banks, 105 billion rupees to be converted into longer-term loans with a period of up to 15 years, and the rest paid to banks through a government bond issue, the Business Standard reported quoting officials.
The deal, which will require the cabinet's approval, also involved what the report called a committed equity infusion by the government. "The restructuring plan has been approved by the banks and we hope cabinet approval will come by the middle of April," a senior Air India official told the paper, requesting anonymity.
"That will help us reduce our interest outlay substantially in the first year, as we get a moratorium on the loan for the first year," the official said. Air India officials could not be reached immediately for a comment. High fuel prices and hiked interest rates have hit the sector hard, with domestic carriers Jet Airways and Spicejet also reporting losses.
The state-run Air India has accumulated losses of over 200 billion rupees since its 2007 merger with Indian Airlines. In the past, the airline has had to ground several flights as it was unable to pay fuel bills. Its employees and pilots recently threatened to strike to protest a delay in payment of salaries and allowances.
Comments
Comments are closed for this article.