Air India announced Wednesday that it is once more seeking to refinance a foreign currency bridge loan which was used to pay for some of its Boeing 777 and 787 aircraft.
The airline is looking to raise $824.7 million by the end of the month. Meanwhile, the government’s deadline for bids on its national airline has been extended until late December.
On Wednesday this week, Air India announced in a tender letter that it is planning to raise ₹6,150 crore ($824.7 million) through short-term loans from domestic lenders.
The airline said that it hoped to secure the loans by the end of the month. Funds raised will go to refinancing international bridge loans previously taken for the purchase of one Boeing 777 and six 787 aircraft.
Aircraft as collateral
As reported by Live Mint, Air India will offer aircraft, including the above-mentioned models, as collateral for the loans. The airline has set an, under the circumstances, ambitious plan to repay the entire loan within a year.
Meanwhile, this is not the first time debt-laden Air India is seeking new loans for its purchase of the Boeing jets, for which it has yet to secure long-term financing.
Almost precisely one year ago, according to the Economic Times, the Indian flag-carrier also sought to raise ₹5,800 crore ($819 million).
The seven widebodies in question were part of a larger order for 27 B787-800s and 15 B777-300ERs. Twenty-one of the 787s are on sale-and-leaseback agreements, while the remaining six are on short-term financing, as is one of the 777s.
Bid deadline extended
The move comes as the Indian government is in the midst of selling its national airline.
The Minister of State for Civil Aviation, Hardeep Singh Puri, has said that the disinvestment was decided as further financial support to revive the struggling Air India would not be the best use of scarce government resources.
The government has time and again extended the time limit for potential buyers to make their bids. The most recent October 30th deadline was extended until 17:00 on December 14th. Bidders will be informed of the government’s decision by 17:00 on December 28th.
Previously, the government required whoever purchased Air India, of which 100% of equity is on offer, to absorb ₹23,000 crore ($3 billion) of the carrier’s debt.
Along with the extension of the bid deadline, the Ministry of Civil Aviation changed its tone to say that bidders could choose how much debt they were willing to absorb.
Domestic air traffic on the way up
Meanwhile, any prospective buyer may take heart in the fact that India’s domestic aviation is slowly but surely making a rebound following the country’s total lockdown in March.
