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Air India to sell Rs 795-cr bonds

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Bloomberg Mumbai

Air India, the loss-making government carrier, plans to sell Rs 795 crore (over $17 million) of bonds as it seeks to combat rising competition and turn around unprofitable routes. Mumbai-based Air India will sell the bonds to pay for new planes, Chairman and Managing Director Arvind Jadhav said in a telephone interview today, without being more specific.

Parent company, National Aviation Company of India Ltd (Nacil), hired Standard Chartered Plc to help it sell Rs 700 crore of 10-year bonds this month and to help its low-cost Air India Express unit issue Rs 95 crore of similar-maturity notes, according to two people familiar with the matter, who asked not to be named because the terms are private.

 

Air India may report a Rs 5,400-crore loss for the financial year ending this month compared to a loss of Rs 5,550-crore a year earlier, civil aviation minister Praful Patel told lawmakers on March 9.

The government approved an Rs 800-crore cash injection last month after Air India delayed salary payments for its 31,000 workers in June because of a cash crunch.

Jadhav said in August that Air India would create four business units, slash capacity and pay debt to turn profitable in three years.

The company’s debt more than doubled to Rs 15,241 crore as of June after ordering 111 new planes from Airbus SAS and Boeing Co, according to Patel. National Aviation’s bonds will have the top AAA rating from Crisil Ltd due to its government support, according to a statement posted on the risk assessor’s website. Neither Nacil nor Air India have public bonds outstanding, according to data compiled by Bloomberg.

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First Published: Mar 23 2010 | 1:16 AM IST

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