Air India will borrow Rs 18,000 crore from the State Bank of India (SBI) and Bank of Baroda (BoB) to refinance its existing debt over the short term. The airlines owned by the Tata Group may later seek longer loans. The borrowing will take the form of one-year loans.
Air India to borrow money from banks to refinance existing debt
“Tatas made the decision to keep the current financing arrangement in place for another year, but they will eventually come up with a long-term debt management plan. Loan rates are greater than they were previously, reflecting the rapid increase in interest rates over the last year.”
These loans will continue the financial facility that Tata Group acquired after purchasing Air India. The Reserve Bank of India increased the repo rate by 225 basis points since the airlines obtained loans from SBI and BoB in January 2022, which will result in higher interest charges. At an interest rate of 4.25 percent, the airline had borrowed money totaling Rs 10,000 crore from SBI and Rs 5,000 crore from BoB. It is anticipated that the new interest rate will be 6.5%.
The Tata Group is attempting to merge its many subsidiaries, including AirAsia India and Vistara, in addition to overhauling the operations of Air India. The Tata Group and Singapore Airlines jointly own Vistara.
“The group’s future plans for Air India depend on the completion of the merger formalities because that is when the nature and amount of the cash would be clear. Therefore, banks will be anticipating receiving a share of this highly rated corporate loan later in 2023.”
Another individual with knowledge of the situation informed
In addition, Air India is acquiring 495 aircraft.
Also read:
DGCA Fined Vistara Of 70 Lakh For Not Operating Flights To Northeast | Exclusive
India’s Domestic Air Traffic Reaches 86% Of Pre-covid Level In 2022: IATA | Exclusive
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