After getting the approval for Rs 800 crore equity infusion from the government, loss-making Air India is now planning to raise its working capital by Rs 1,000 crore in the near future.
A decision to this effect is understood to have been taken at a Board meeting of the National Aviation Company of India Limited (NACIL), which runs the national carrier, here today, informed sources said.
The decision would help the airline to raise resources from the market to fund its fleet acquisition as well as other operational costs.
As part of its cost-cutting measures, NACIL has been in negotiations with several state-run banks for some months now to avail loans of about Rs 1,500-2,000 crore on its working capital to convert its high-cost debt into low-cost.
The cash-strapped carrier already has over Rs 16,000 crore working capital borrowings on its balance sheet, coupled with around Rs 7,200 crore expected losses in the last fiscal. Its borrowings have risen steeply from Rs 6,550 crore in November 2007 to Rs 15,241 crore in June 2009.
This was largely due to servicing of debt on account of purchase of new aircraft as also its operating losses which have compounded due to the economic recession and high oil prices.
The airline is also plagued with high fixed cost, high expenditure on insurance, interest on working capital, and aircraft loans that have not been matched with corresponding percentage increases in revenue.