Air India to Use Govt Dole to Trim its Aircraft Loans
Anirban Chowdhury & Mihir Mishra
Mumbai | New Delhi: National carrier Air India is set to reduce its aircraft loans after Finance Minister Arun Jaitley allocated ₹ 1,800 crore toward retiring debt that has been raised to fund fleet expansion of the debt-laden airline.
Air India, which is battling both full-service and low-cost private carriers for market share at home and the country’s immediate neighbourhood, has a debt of about ₹ 45,000 crore on its balance sheet.
Of the loans, ₹ 14,000 crore are aircraft loans, while the rest are working capital funds that include non-convertible debentures of ₹ 7,500 crore.
A reduction in fuel prices and efforts to pare down costs helped Air India turn in a better financial performance, although itstill accounts for the biggest quantum of industry losses. In FY16, net loss stood at ₹ 3,837 crore as against ₹ 5,859 crore in FY15.
“Of the ₹ 2,800 crore we had sought, ₹ 1,800 crore is for repaying aircraft loans and the rest was for compensation on account of the rupee’s movement against the dollar, something that has increased the cost of servicing our aircraft loans,” a senior Air India executive, who did not want to be identified, told ET.
He added that the infusion will be used to repay aircraft loans.
Airline hopes allocation of 1,800 cr for retiring debt will help it tide over debt crisis