Air India to fly higher with Rs 10,000 crore debt rejig plan

Air India that has recently posted its quartely result in green, is now looking to rejig debt worth Rs 10,000 crore under the scheme for sustainable restructuring of bad assets floated by the Reserve Bank.

Sources said that Air India under its revival plan is actively looking at the possibility of availing RBI's new scheme Sustainable Structuring of Stressed Assets (S4A)that was introduced in June this year,to rejig debt to the tune of at least Rs 10,000 crore. In case the proposal gets a green signal, it would be first time that a public sector (PSU) undertaking avails the scheme.

To strengthen the ability of lenders to tackle stressed assets and provide an avenue for reworking the financial structure of entities facing genuine problems, thecentral bank has introduced 'S4A'.The Scheme for also came against thebackdrop of rising concerns over NPAs in the banking system.      

Air India, which has been in the red for the past many years, has posted an operating profit of Rs 105 crore in the last fiscal - first time in a decade. The carrier is also working on ways to bring down its overall debt burden, especially with respect to significant interest outgo.
Currently, the airline's debt is estimated to be more than Rs 50,000 crore. A consortium of 19 lenders have extended loans to the national carrier.

According to sources, SBI Capital Markets would be roped in to work on the nitty gritties of the proposal and the whole process of availing 'S4A' is expected to take at least six months.     

The airline is surviving on a Rs 30,000 crore bailout package from the government that is spread over ten years. Rs 22,000 crore has been provided to Air India underthe turnaround plan which includes financial support towards repayment of principal as well as interest on government-guaranteed loans taken for aircraft acquisition.