AIR INDIA ASKS GOVERNMENT TO REFINANCE ITS ₹20,000 CR DEBT

NEW DELHI: Air India, which has transferred interest payment liabilities of ₹29,000 crore of its total debt to a special purpose vehicle (SPV), has suggested that the government refinance ₹20,000 crore debt by March 31.

The move, if successfully implemented, will significantly reduce interest payment on these loans, a senior official of the airline said on Tuesday.

The airline transferred its interest payment liabilities on debt to the SPV in October and is awaiting bank approvals for transferring debt of up to ₹29,000 crore to the SPV.

Air India’s current annual interest payment to banks is about ₹4,400 crore. This will come down to ₹1,500 crore annually after the banks give their approval.

The refinancing of ₹20,000 crore debt would include refinancing from banks and utilization of debt instruments like nonconvertible debentures (NCDS), said the official mentioned above on condition of anonymity.

About ₹7,000 crore of the ₹29,000 crore of the airline’s debt has been refinanced through NCDS already, the official said.

Air India has net debt of about ₹55,000 crore, including the ₹29,000 crore that is to be transferred to the SPV after approval from banks. Of this, about ₹35,000 crore is working capital debt while ₹20,000 crore is aircraft debt.

“The aim of the airline is to be profitable. With oil prices coming down and rupee stabilizing, the reduction in the early interest rates will help Air India work towards profitability,” said the airline official. The airline plans to operate more Airbus A320neo aircraft on domestic routes connecting cities.