Air India to raise Rs 1,900 cr via ECB

The resources raised through the ECB route will be utilised for carrying out maintenance on its aircraft and ensure that more aircraft can be used in to operate flights.

By: ENS Economic Bureau | New Delhi | Updated: July 23, 2015 1:29 am

Air India will get a sovereign guarantee from the government to raise $300 million (Rs 1,900 crore at Rs 64 per dollar) through the external commercial borrowing route. A senior official in the Ministry of Civil Aviation said, “The money is being raised to meet the airline’s working capital requirements.”

The government will pay only Rs 2,500 crore as promised under the package from this year. A substantial part of the government infusion for this year will be used to service aircraft loans, hence, the need to raise money through ECB was felt.

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The resources raised through the ECB route will be utilised for carrying out maintenance on its aircraft and ensure that more aircraft can be used in to operate flights. At the moment, Air India has 62 narrow body aircraft from the Airbus A-320 family, but due to lack of maintenance and spares it is able to utilise only 59 of these aircraft, sources said.

The availability of a sovereign guarantee will ensure that the state-owned airline is able to get the funds at competitive rates. “The money raised through ECB is cheaper for the airline, as the interest rates are lower by at least 1.5-2 per cent,” informed the official.

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