Beleaguered Air India pleads for cut in interest rates on loans from banks

In line with the reduction of interest rates in the market Air India, burdened with a neck-high debt of over Rs 46,000 crore, has asked 16 of its lenders to cut down the interest rates by as much as 2 percent in a letter. In order to settle its debt, the airline is also in talks with the Ministry of External Affairs and also with a state-owned infrastructure company NBCC to generate money by selling off 98 of its properties, some of which are in India and some are overseas.

According to a senior Air India official, “If bankers accept the request, it would bring down the interest cost to around 8.5 per cent from over 10 per cent at present.” He further added, “This would result in annual savings in interest costs of about Rs 200 crore on loans of around Rs 15,000 crore. We have written to around 16-17 banks and to the consortium leader State Bank of India. The banks have so far not responded and they usually take their time,” as quoted by Indian Express.

A list including the names of 60 properties of has been forwarded to the MEA by Air India, while a list of 38 properties has been sent to NBCC by the airlines for selling in order to raise money. So far, the airlines has been able to sell off four flats at Sterling Apartments, Mumbai and a land worth Rs 88 crore and Rs 19.81 crore respectively against its annual asset sale target of Rs 500 crore. The airlines is expected to generate Rs 91 crore annually by leasing out its office space at the Air India building in Nariman Point in Mumbai, according to an Indian Express report.

The airlines is expecting to post an operating profit for the year 2016-17, similar to the Rs 105 crore profit that the airlines earned in 2015-16.

Air India