Air-India Mulls Sale, Lease-Back

Cash-strapped Air-India is exploring various possibilities to raise funds to tide over its liquidity crisis.

The company is examining the option of going for a sale and lease-back of six Boeing 747-400s. Besides, it is planning a debenture/bond issue of around $100 million by securitising its foreign exchange earnings that constitute 65 per cent of its business. Air-India's route rationalisation committee is meeting next week to determine the airline's low-traffic routes. The airline proposes to rationalise routes to cut losses. The airline also plans to claim compensation from Indian Airlines for its foray into international operations. It is also looking at streamlining its inventory that is worth around Rs 600-700 crore, industry sources said.

 

Air-India's operations have also been affected by the recession in Southeast Asia. Besides, intense competition between major international carriers has resulted in a sharp drop in rates, forcing Air-India to follow suit.

The airline is working on replacing high-interest debt with low-cost loans.

The company is following a three-pronged strategy to cut down interest outgo. Besides the bond issue, the airline is also looking at raising wraparound loans and securitising assets.