Air India to raise ₹2,500 cr via short-term loan by month end

NEW DELHI: Debt-laden Air India Ltd plans to raise up to ₹2,500 crore through a short-term loan (STL) from domestic lenders by the end of this month, a senior airline official said on Monday.

Proceeds of the loan would be utilised to repay a portion of the dues the airline owes its vendors, including oil marketing companies (OMCS), said the official, requesting anonymity.

The loan would carry a sovereign guarantee, the official said.

State-run fuel retailers Indian Oil Corp. Ltd, Bharat Petroleum Corp. Ltd and Hindustan Petroleum Corp. Ltd had on October 10 informed Air India that they will suspend jet fuel supplies at six airports if the airline does not clear pending fuel bills by 18 October.

The national carrier owes about ₹4,000 crore in dues to the fuel retailers and is unlikely to meet the deadline, said a second Air India official, who also requested anonymity.

The fuel retailers had on August 22 stopped fuel supplies to Air India at six airports—kochi, Mohali, Pune, Patna, Ranchi and Visakhapatnam—over payment defaults.

They resumed supplies as part of a deal that allowed the oil companies to receive at least a total of ₹100 crore from Air India, every month, from September.

Air India has however failed its September instalment of ₹100 crore to the oil marketing companies (OMCS).

“September is traditionally a weak month with low passenger demand. So, we didn’t have extra cash to pay off the OMCS,” said the first official mentioned above.

“We are heading into the festive season (October-january period), during which our cash flows are expected to strengthen. We will definitely maintain the monthly payment of ₹100 crore to OMCS (from October),” the official added. For the past few months, Air India has been making daily payments to the oil companies for its fuel purchases.