Air India accepts corporate debt restructuring package

MUMBAI: State air carrier Air India on Wednesday said that it has accepted the corporate debt restructuring (CDR) package first prepared by SBI Caps and then vetted by Deloitte. "Air India has accepted the CDR package submitted by Deloitte," the airline's Chairman and Managing Director, Arvind Jadhav, told reporters here. The package was approved after several confabulations with banks and the government, he said. "We are going to meet the bank consortium and will soon announce the details," the Air India chief said.

In early-December, Air India had appointed global consultancy firm Deloitte to vet the SBI Caps-prepared financial restructuring plan. The firm, after going through the proposal, has now submitted it to Air India. While asking Deloitte to vet the SBI Caps report, Air India claimed the foreign agency was appointed mainly to vet the business plan as an independent aviation consultant before the restructuring plan was submitted to the Reserve Bank of India.

Air India is saddled with a debt of about Rs 40,000 crore of which Rs 18,000 crore is working capital loans taken from a consortium of banks, while the balance Rs 22,000 crore worth of loans is towards payment of new aircraft ordered.

It has already raised loans worth around Rs 14,000 crore to fund the purchases and is currently in the process of raising more money. The working capital loan was mostly extended by state-run banks like SBI, PNB, IDBI Bank and Syndicate Bank. Over the past four fiscals, Air India's losses have aggregated to Rs 14,000 crore.

If the Reserve Bank of India agrees to the proposal, Air India will be able to reduce the interest rate on its working capital loans to 6-6.5% from the present 12%, thereby considerably reducing its debt servicing burden.

Meanwhile, asked about the strike call by a section of its pilots from Wednesday, Jadhav said that the DGCA is now looking into the matter. The Delhi High Court, has, in an order yesterday, restrained the pilots from going on strike. To a question whether the air carrier had a contingency plan in the event of a strike, Jadhav said that "we always have a contingency plan."