In order to reduce its interest outgo on the current dues, Air India plans to repay some of its debt that carry high interest rate.
As part of this initiative, the airline plans to borrow Rs 900 crore from banks through issue of bonds. The amount would be used to repay a part of its debt.
Air India is said to owe around Rs 2,000 crore to oil marketing companies and around Rs 1,000 crore to various airport operators. The details have not been worked out.
The firm is paying an interest of around 16 per cent on a large part of its dues. With the payment of Rs 7,400 crore to banks through the bond issue that will close by the middle of next month, the airline will borrow Rs 900 crore from banks to repay a part of it.
As part of Air India’s financial restructuring package, banks have converted 60 per cent of its total short-term debt to long-term with a lower interest rate. The rest Rs 7,400 crore are to be paid to banks through a government guaranteed bond issue that will close by mid-December.
It is learnt that the airline does not require extra money to fund its day-to-day operations, as the operations are being funded by internal accruals and Rs 2,000 crore cash credit account is enough for the airline.
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