New Delhi, Oct 4: A proposal for financial restructuring of Air India would come up for discussion at a meeting of a Group of Ministers (GoM) next week, with the national carrier also likely to seek government nod for fleet expansion plan till 2020.
The restructuring plan would also include a proposal for converting its high interest debt to low interest ones and the issuance of a letter of comfort for its lenders -- banks and financial institutions, official sources said here.
The restructuring and turnaround plans, vetted by a Committee of Secretaries, would be placed before the GoM.
The letter of comfort is likely to be issued to ensure that banks and FIIs do not classify Air India's loans as non-performing assets.
Air India Board, which met in August, has decided to go ahead with the acquisition of Boeing 787 Dreamliner aircraft as part of a fleet acquisition programme till 2020 and would be seeking government nod for it, the sources said.
A proposal for equity infusion of Rs 6,600 crore for the ailing carrier has already been mooted by the Civil Aviation Ministry to enable the airline clear its massive dues. The government has already infused equity worth Rs 2,000 crore in the last two financial years.
The debt-ridden carrier has outstanding loans and dues of Rs 67,520 crore, of which Rs 21,200 is working capital loan, Rs 22,000 crore is long-term loan on fleet acquisition, Rs 4,600 is vendor dues and an accumulated loss of Rs 20,320 crore, latest official figures show.
On fleet acquisition, the Board recently reviewed a modified Turnaround Plan prepared by SBICaps which suggested "a scenario for expansion" of Air India that included further fleet acquisition to meet the demands of growth of the Indian aviation market.
A strong case for the acquisition of the Boeing 787 Dreamliner as per the original 2005 order for 27 of these planes was made at this Board meeting in a presentation.
The list price of a Boeing 787-8 last year was USD 185.2 million. The American aircraft manufacturer was supposed to have delivered the 787s by 2008, but due to delays caused by several factors including a strike by Boeing workers, the first of these planes are likely to be inducted by Air India this year-end.
On another crucial issue, the GoM had at its last meeting on August 18 directed oil companies not to keep Air India on cash-and-carry system, that is daily payments for uplift of jet fuel, but put it on a month's credit line.
Following this decision, the airline created an escrow account in which at least Rs 5 crore is being put daily to avoid any default on payments to the oil companies.
From now on, Rs 450 crore would be paid every three months by the airline. This would provide some cushion to enable it pay staff salaries, the sources said.
Earlier, disruption in jet fuel supplies due to non-payment of dues to oil PSUs had forced the carrier to cancel about 150 flights that led to a loss of Rs 10 crore. PTI
Latest Business News
