AI meets RBI with much-delayed CDR proposal

The much-delayed corporate debt restructuring (CDR) plan of the ailing national carrier Air India got moving today with top honchos of the airline and SBI Caps, which has drafted the proposal, discussing the matter with the Reserve Bank this evening.

The delegation was led by Air India Chairman and Managing Director Rohit Nandan, Aviation Secretary Nasim Zaidi and SBI Caps Managing Director and Chief Executive S Vishvanthan. 

Sources said that the delegation would be making a CDR presentation to the central bank.

However, a senior SBI Caps official told PTI outside the RBI headquarters prior to the meeting, "We are meeting the Governor (Duvvuri Subbarao) and the Deputy Governor (Anand Sinha). We are paying a goodwill visit and not making a CDR presentation per se to them today."

The proposal, prepared by SBI Caps, has been pending since last October. The SBI Caps proposal was later vetted by foreign agency Deloitte early this year. But since then the plan got stuck due to many reasons. On October 28, a group of ministers meeting on the AI revamp plan had asked the airline to get proposal vetted by RBI within a week.

The GoM had also deferred a decision on AI's ambitious acquisition plan of 27 Boeing 787 Dreamliners and additional equity infusion to the tune of Rs 6,600 crore to the outcome of the proposal from RBI. "A report on the Air India debt restructuring prepared by the committee of officers will be reviewed by RBI within a week. Only after that will any decision be taken," Aviation Minister Vayalar Ravi had after the GoM meeting last week.

The debt-ridden national carrier has outstanding loans and dues of Rs 67,520 crore, of which Rs 21,200 crore is working capital loan, Rs 22,000 crore long-term loans on fleet acquisition, Rs 4,600 crore of vendor dues and an accumulated loss of Rs 20,320 crore, latest official figures showed. In 2010 alone, the airline reported nearly Rs 7,000 crore loss. 

This working capital loan was mostly extended by state - run banks like SBI, PNB, IDBI Bank, and Syndicate Bank. The carrier is also fighting employee issues as a section of its pilots are on strike.

Another section led by the Indian Pilots Guild, belonging to the pre-merger Air India, has dragged the management to the Bombay High Court over pilot training for the proposed Dreamliners. (Here's more about the on-going tiff) 

Air India had sought recasting of its debt on the lines of Kingfisher Airlines, whose CDR plan of Rs 6,000 crore was okayed by RBI last November.

A CDR plan typically involves conversion of part debt into equity capital, and the conversion of the rest into promoters' share capital. Other features include lower interest rates and sanction of additional fund and non-fund based facilities by the lenders, apart from some payment moratorium.

Ravi had said once the RBI reviews the CDR plan, the issues of equity infusion and acquisition of the Dreamliners would be tabled before the Cabinet. The ministry has already moved a proposal for an additional equity infusion of Rs 6,600 crore into the carrier to enable it clear its massive dues. The Centre has already put Rs 2,000 crore into the ailrine in the last two years.

The finances of the airline is so bad that it is even unable to pay oil bills daily, forcing the government to ask oil marketing companies to extend another credit line of three months.