Air India turarnound plan approved, Gvt to provide USD5.8bn bailout for Air India
India's Civil Aviation Minister Ajit Singh announced (12-Apr-2012) the Government approved the Turn Around Plan (TAP) and Financial Restructuring Plan (FRP) for Air India. The Cabinet Committee on Economic Affairs (CCEA) has taken up the issues relating to TAP and FRP of Air India and decided to approve them. Mr Singh said the approval of the TAP and FRP by the CCEA would help Air India in gaining:
- Upfront equity support of INR67.5 billion (USD1.3 billion);
- Government guarantee for repayment of principal amount and payment of interest on the non-convertible debentures of INR7.4 billion (USD1.4 billion) proposed to be issued to financial institutions, banks, LIC, EPFO etc and used to repay part of working capital loans;
- Equity for cash deficit support of INR45.5 billion (USD883 million) till FY2021;
- Equity for already guaranteed aircraft loan of INR138.29 billion (USD3.7 billion) till FY 2021;
- Induction of already contracted for aircraft which include 27 Boeing 787 and three 777-300ER aircraft on a sale and lease back basis.
The Minister also stated the banks have also approved conversion of short-term/working capital loan of INR110 billion (USD2.1 billion) in long-term loans. TAP and FRP had been prepared by the management of Air India in consultation with SBI Caps and vetted by Deloitte. The FRP and TAP were also examined by a Group of Officers constituted by the Group of Ministers (GoM) on Civil Aviation. The GoM had recommended the TAP and FRP for approval of CCEA. The Minister, however, noted "the releases of various tranches of equity, however, would be subject to achievement of various laid down milestones that includes pay Load Factor (PLF), On Time Performance (OTP), Fleet utilisation, Yield Factor, rationalisation of various emolument structure of the employees etc". An Oversight Committee will be constituted to monitor and ensure the milestones are achieved before the release of tranches. [more - original PR]