Air In­dia to Use Govt Dole to Trim its Air­craft Loans

The Economic Times - - Budget: Day After -

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

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