GoM approves Air India debt recast

The Group of Ministers (GoM), headed by Finance Minister Pranab Mukherjee, has cleared Air India’s debt restructuring package and allowed Air India to float bonds worth Rs 7,500 crore.

“Air India’s financial restructuring package has been approved by the group and bonds will be floated for Air India. The final approval will come from the Cabinet,” Civil Aviation Minister Ajit Singh said after the meeting.

Air India’s debt restructuring plan had hit a hurdle after the banks had refused to convert a part of the short-term debt into equity.

According to the earlier plan, the banks were to restructure a debt of Rs 18,000 crore. Of the Rs 18,000 crore, around Rs 10,500 crore will be converted into long-term with a repayment period of 10-15 years and the rest was to be converted into equity by banks.

The banks objected to this because they were not getting any representation on the airline’s board and they were not sure about the airlines’ revival.

Air India has accumulated losses of over Rs 20,000 crore and still making losses of Rs 500 crore monthly.