Disinvestment-bound Air India has sought proposals for short term loans worth ₹ 1,500 crore to meet its “urgent” working capital needs, according to a document.
This is the second time in over a month that the flagship carrier has floated tenders for short tenure loans even as the government is working on the modalities for the stake sale.
The debt-laden carrier, which is surviving on taxpayers’ money, is battling multiple headwinds, including financial woes and stiff competition.
In a document that has been issued on October 18, Air India has said that it is looking for “government guarantee backed short term loans totalling up to ₹1,500 crore to meet its urgent working capital requirements“.
The loan would have a tenure up to June 27, 2018 from the date of being availed and the deadline could be extended.
“The amount of ₹ 1,500 crore will be drawn in one -three tranches... The Government of India guarantee, is valid up to June 27, 2018 or till the date of disinvestment. Air India would like to draw the short term loan within three working days after awarding the acceptance letter to the successful bank/s,”” the document has said.
With regard to the loan, the carrier has requested banks to submit their financial bids along with the amount they are willing to provide by October 26.
The airline has last month sought proposals for short—term loans of up to ₹3,250 crore to meet urgent working capital requirements. It could not be immediately ascertained whether adequate response was received
As part of a turnaround plan approved by the previous UPA regime, Air India is to receive up to ₹30,231 crore from the government subject to meeting certain performance thresholds. and it has so far received around ₹ 26,000 crore under the package.
The 10 year bailout package began from 2012.
In June this year, the Cabinet Committee on Economic Affairs (CCEA) gave its in-principle nod to the strategic disinvestment of the airline - which has a debt burden of more than ₹ 50,000 crore.
A ministerial group is now working on the disinvestment modalities, including treatment of Air India’s unsustainable debt, hiving off of certain assets to a shell company, demerger and strategic disinvestment of three profit—making subsidiaries.
