The board of the embattled national carrier Air India met here today and reportedly decided to submit a revised turnaround plan to the government.
Though airline spokesperson described the meeting as "routine", a source said, "The board decided to submit a revised turnaround plan to the government following the finance minister's recent call to cut down on expenses. It also discussed the funding plan for the proposed acquisition of 27 Boeing 787 Dreamliners."
The national carrier, which is sinking in a pit of Rs 63,000-crore debt and has not been paying its employees for months now, has been demanding an emergency Rs 3,000 crore capital infusion from the government.
But the group of ministers, which is looking into the problems plaguing the flag carrier and the turnaround plan, is yet to take a call on the fund infusion. The GoM is also not convinced of the feasibility of the SBI Caps-Deolitte-prepared turnaround plan.
Air India has a debt of Rs 42,000 crore incurred by way of its 2007 plan to acquire over 110 planes from Boeing and Airbus, besides a working capital loan of over Rs 21,000 crore. The working capital loan was mostly extended by a consortium of state-run banks like SBI, PNB, IDBI Bank, and Syndicate Bank among others.
Over the past four fiscals, the airline accumulated Rs 14,000 crore losses and is likely to report a loss of Rs 7,000 crore in FY11.
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If the RBI agrees to the SBI Caps drafted proposal, Air India will be able to reduce the interest rate on its working capital loans to 6-6.5% from the present 12%, considerably reducing its debt servicing burden.
Recently, AI had moved the US Exim Bank to secure a guarantee for a $832-million loan to part-fund the acquisition of 27 Dreamliners. Out of this, seven planes are slated to be delivered from October through March.