Air India has succeeded in its attempt to restructure a INR22,000 crore bank loan.
The Reserve Bank of India (RBI) has agreed to rework the loan, with INR7,500 crore changed into cumulative preference shares, INR 11,000 crore having its interest rate lowered, and INR3,500 crore to remain the same. Repayments of another INR21,000 aircraft purchase loan are likely to be taken over by the government.
According to an Economic Times report, the national carrier can expect an annual saving of INR1,000 crore in its interest payments following the restructuring, which is expected to be completed within 120 days.
Air India is also expected to receive INR6,750 crore from the government this financial year, with an additional INR5,550 crore following the INR1,200 crore given earlier. This will enable the airline to pay its debts to fuel companies and airports.
The government has given the Air India INR32 billion in bailouts since 1 April 2009 as it continues to struggle since its merger with Indian Airlines. The latest bailout is unlikely to please India’s loss-making private airlines, as they meet with the government in an effort to work out ways of easing the current operating environment.