State-owned National Aviation Co of India Ltd (NACIL), the operator of Air India, is set to raise about US$1bn (Rs4,870 crore) in the form of an 11-year loan from JPMorgan to fund the purchase of 10 Boeing Co aircraft – part of a larger order of 68 aircrafts.
The loan will be guaranteed by the US Export-Import Bank (EIB) and is likely to help the struggling carrier save about US$1m a month in interest costs.
Nacil, a entity formed after merging domestic carrier Indian Airlines and international operator Air India, has announced it will, very likely, post record losses of Rs5,000 crore for fiscal 2008-09. According to sources in the ministry of civil aviation, Nacil had floated a tender to raise US$1.06bn to buy 10 Boeing planes and is now being offered the loan by JPMorgan at attractive terms.
The purchases are part of a huge order, made in 2005, for 111 aircraft – 68 from Boeing and 43 from Airbus SAS-at a list price of nearly US$15bn. The carrier’s borrowings have risen from Rs6,550 crore in November 2007 to Rs15,241 crore as of June 2009.
Meanwhile, Air India is moving to leverage its properties in India and abroad in a bid to raise revenue and cash. As an additional measure, the carrier is looking at vacating some of its offices and relocating staff to other stations.
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