Air India Seeks $819 Million Loan For Seven Boeing Planes
An Air India Ltd. aircraft prepares to land at Chhatrapati Shivaji International Airport in Mumbai, India. (Photographer: Dhiraj Singh/Bloomberg)  

Air India Seeks $819 Million Loan For Seven Boeing Planes

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Air India is looking to raise $819 million to refinance existing bridge loans availed for six Boeing 787 and one Boeing 777 aircraft, even as the government prepares for the national carrier’s privatisation.

The Department for Promotion of Industry and Internal Trade and the civil aviation ministry are looking at the possibility of relaxing foreign direct investment norms in aviation to attract bidders for Air India's sale, an official said.

The government is having a second go at Air India privatisation, as the airline is sitting on a debt pile of over Rs 58,000 crore, besides accumulated losses.

Bids for Air India’s sale are likely to be called in November.

The national carrier is yet to have long-term financing facility for the seven Boeing aircraft, a tender document for refinancing the bridge loans indicated. Bids have been invited from banks, financial institutions for refinancing existing bridge loan facility worth $819 million.

At the current exchange rate, the amount will be more than Rs 5,800 crore. A bridge loan refers to borrowing made till a long-term funding facility is available.

Air India had acquired 27 Boeing 787-800 planes and 15 Boeing 777-300ER aircraft. Out of them, 21 Boeing 787s are on sale and lease back while the remaining six are on short term bridge loans. Among the 15 Boeing 777 aircraft, one is on short term bridge loan.

Out of the total $819 million bridge loan, $135 million will be earmakrked for the Boeing 777 plane and the rest for the 787s, according to the tender document. The loan tenure would be "one year or till the long term take out financing is in place, whichever is earlier".

The central government guarantee will be provided for all the planes.

The deadline for submission of bids by banks and financial institutions is Nov. 14.

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