Air India to raise Rs 500 cr via short-term borrowings

“Air India is inviting bids for government-guaranteed short-term loans (STLs) totalling to Rs 500 cr to meet its urgent working capital requirements,” the bid document said. The tenure of the loan will be for one year (renewable) from the date of availing the STL, it added. The banks have been asked to submit their bids by September 10. In July, the government had sought Parliament’s approval for Rs 980 cr in supplementary grants towards equity infusion in the national carrier. The amount is still  awaited by the carrier. This is the second time in this fiscal year that the airline is borrowing for working capital. 

In June as well, Air India had borrowed Rs 1,000 cr through short-term loans to pay staff salaries and meet other payment obligations following a failed privatisation attempt. Its debt is estimated to be over Rs 50,000 cr. The carrier had borrowed Rs 6,250 cr from various banks between September and March quarters last fiscal for its day-to-day capital needs. Air India is staying afloat on a bailout package extended by the government in 2012, as part of a turnaround plan (TAP) and a financial restructuring plan (FRP). 

In the current fiscal year, it has received an equity infusion of Rs 650 cr up to June. Under its turnaround and financial restructuring plans approved by the government in April 2012, Air India is to receive a budgetary support of Rs 30,231 cr over a 10-year period ending March 2021. Air India has received an equity infusion of Rs 27,195.21 cr so far.