The management of Air India has committed to posting an operating profit in the next fiscal year and a cash profit by 2018. These were the preconditions set by bureaucrats overseeing the airline’s debt recast plan along with SBI Capital Markets Ltd for it to qualify for government funding until 2021, two Air India executives told Live Mint.
The Reserve Bank of India (RBI) is examining the financial restructuring plan and is expected to give its approval by the end of the month, said one of the AI executives.
Air India has accumulated INR13,300 crore in losses since its merger with Indian Airlines in 2007. The state-run carrier has total loans of INR43,000 crore, including INR22,000 crore of short-term loans.
“We have asked for conversion of short-term working capital into long-term capital of INR11,000 crore and INR7,000 crore into cumulative preference shares, paying 8% dividend,” the AI executive said.
The recast plan proposes that banks should be allowed to carry the debt on their books as performing assets. This is because once an asset is classified as a non-performing asset, banks are required to set aside money for it.