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Air India has raised Rs 14,000 crore from the State Bank of India (SBI) and Bank of Baroda (BoB) through a mix of refinancing of old loans and fresh loans, a report by Mint stated quoting people aware of the development.
Rs 1,500 crore has been obtained through the Emergency Credit Line Guarantee Scheme (ECLGS), and Rs 12,500 crore through the refinancing of existing loans. The ECLGS was first introduced during the Covid-19 pandemic to help small businesses but was later expanded to other sectors.
The Mint report stated that the funds would be used by the airline to expand in domestic as well as international markets. As a part of the plan, the airline has announced plans to induct more aircraft, including a recent order of 470 aircraft from Boeing and Airbus.
In FY22, the airline's total debt stood at Rs 15,317 crore, significantly lower than Rs 45,037 crore in FY21. The Tata Group took over Air India in January last year. For this, Tata paid Rs 2,700 crore in cash, taking over Rs 15,300 crore in debt.
"Bankers are more than willing to lend to the Tata Group. Given that there are very few large corporates looking for bank loans, lenders are eager to lap up such proposals," a person aware of the matter told Mint.
The report further added that the loans are benchmarked to SBI's six-month marginal cost of funds-based lending rate (MCLR) and are priced 50 basis points (bps) above it. Currently, SBI's MCLR stands at 8.4 per cent.
The airline also plans to use the money to fund the payout for the voluntary retirement scheme. It is likely to cost Rs 200 crore.
