Air India gets Rs 265cr; partially clears interest burden

The Government today released Rs 265 crore to Air India to partially clear the interest burden to banks.

"Three days ahead of the bank declaring Air India's debt as non-performing assets, the Finance Ministry today released the payment of Rs 265 crore, which will be paid to the banks by tomorrow," an Air India official said.

The cash-strapped national carrier has interest burden of Rs 660 crore for the months of April to June. 

Air India has borrowed loans from a consortium of 22 banks led by SBI. Bank of Baroda, Punjab National Bank and Bank of India are the three biggest lender of the airline. Central Bank and HDFC are the other key lenders. Air India has defaulted interest dues on the working capital debt which is
Rs 22,100 crore.

The banks have given Air India the deadline of July 31 to pay its interest dues, failing which it will be classified as a non-performing asset.

If a company fails to pay installment (principal and interest) for three consecutive months, lenders have the right to classify the loan as a non-performing asset (NPA).

The amount would allow the national carrier to make partial interest payment to the banks, the official said. 

The airline was expecting to get Rs 532 crore from the government in the form of VVIP travel dues.

Air India officials said they were waiting for the government to release funds in the form of equity and VVIP travel after which they will be able to pay the debts.

Last week, a Group of Ministers had given an approval in principle for additional equity infusion of Rs 1,200 crore and VVIP travel allowance of Rs 532 crore.