Air India to raise Rs 1,000 crore in 7th tranche of fundraising this week

• Under the fundraising plan, Air India has raised three tranches of Rs 790 crore each, three tranches of Rs 925 crore each

• According to the sources, Air India has offered Boeing 787 and 777 among other planes as collateral for the loans

New Delhi: Disinvestment-bound Air India is set to raise Rs 1,000 crore this week and with it, the airline will complete its total fundraising of Rs 6,150 crore in short-term loans from local lenders, sources aware of the matter told PSU Watch on the condition of anonymity. Air India has so far completed six of the seven tranches of fundraising. The seventh and the last round is due to be completed this week. The loans carry a sovereign guarantee.

Air India went for fundraising after the Centre refused to infuse any more equity into the financially battered airline. Instead the Centre said that it will stand as a sovereign guarantor for the airline's debt.

Air India offers planes as collateral for loans

According to the sources, Air India has offered Boeing 787 and 777 among other planes as collateral for the loans. A tender document posted on Air India's website shows that the loans are to be repaid in a year. Under the fundraising plan, Air India has raised three tranches of Rs 790 crore each, three tranches of Rs 925 crore each and one tranche of Rs 1,005 crore is going to be raised this week. It was done to retire high-cost debt, said sources. 

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The backdrop

The news comes as the government is looking to offload its stake in the airline and offer management control to a private entity. The Centre recently changed the terms for the airline's privatisation by allowing investors to quote the level of debt they are comfortable absorbing. Air India is now to be sold on the basis of its enterprise value. At the end of FY19, Air India had liabilities and provisions of Rs 70,686.6 crore and a net debt of Rs 58,255 crore. 

The Centre had earlier transferred Rs 29,464 crore of this debt from Air India to a government-owned special purpose vehicle (SPV), Air India Assets Holding Co. Ltd.

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