* Banks to seek minor clarification from cbank
* Govt to infuse 67.5-bln-rupee equity over 10 years
* India to also back Air India's jet purchases
* Air India to sell and lease back Boeing Dreamliners
By Anurag Kotoky
NEW DELHI, Nov 28 A consortium of lenders
to state-run Air India has broadly approved its
financial restructuring plan, a move that would come as a huge
relief for the cash-strapped airline, a source with direct
knowledge of the development said on Monday.
The lenders' consortium plans to seek "minor clarification"
from the country's central bank on the restructuring plan, the
source said, after a meeting of the lenders of the troubled
carrier in New Delhi.
Last week, India's central bank had approved extension of
the tenure of loans to the state carrier by five years with the
loans now being due for repayment after 15 years.
"Banks raised couple of clarifications from the Reserve Bank
of India...now State Bank of India, which is the leader
of the consortium, will take those up with RBI," the source
"The banks will now start their internal process of formal
Air India was in talks with banks to restructure its
working capital debt of about $4 billion and is in the midst of
implementing a turnaround plan with a hub-and-spoke route model
focus, cut costs by redeploying staff and unload non-core real
The civil aviation ministry will prepare a cabinet note on
the turnaround plan in the next few days, the source said.
Saddled with a total debt of around $9 billion, Air India
has posted a net loss before tax of 70 billion rupees for the
year ended March, according to government estimates.
The government plans to infuse 67.5 billion rupees by way
of equity in Air India over 10 years. It also plans to back Air
India's aircraft buys worth 170-180 billion rupees over the next
10 years, the source added.
Earlier in November, a U.S. airline body sought to block
$3.4 billion in pending taxpayer-backed loan guarantees for Air
India to buy Boeing Co jetliners.
Air India had ordered up to 50 long-range Boeing jets worth
about $6 billion in 2005..
The government would cover 45 billion rupees of Air India's
accumulated losses, the source said.
He said the national carrier plans to sell and lease back
Boeing 787 dreamliners to cut its debt.
A consortium of as many as 26 banks, including State Bank of
India, IDBI and Bank of Baroda, have exposure
to the carrier.
India's airlines are struggling with surging oil prices,
high sales tax on jet fuel and below-the-belt pricing due to
increased competition, leading to massive losses.
According to the Centre for Asia Pacific Aviation, Indian
airlines are on course to post record losses of more than $2.5
billion for the year ending March 2012, with Air India likely to
account for more than half of this.
Investors have become wary of an industry that, just a few
years back, ordered hundreds of aircraft in an ambitious bet on
Kingfisher Airlines, India's third largest, has
cancelled scores of flights this month, as its net worth eroded,
prompting it to approach lenders for a cushion to ease its debt
Chiefs of beleaguered Indian private airlines on Saturday
met Prime Minister Manmohan Singh seeking his intervention to
help the carriers tide over the deep financial crisis and were
assured that "legitimate" grievances would be considered, the
Press Trust of India reported.