New Delhi: Cash-strapped national carrier Air India's board on Tuesday said its lenders have agreed to restructure the airline's massive debt of Rs 42,923.16 crore, after the Reserve Bank of India (RBI) gave the nod to the financial restructure plan (FRP) for the carrier.
"The bankers have given the nod to the restructuring programme subject to certain issues being again taken with RBI," the airline said in a statement after its board meeting, held at Airlines House, the company's New Delhi-based headquarters.
The development comes after Air India's management met the lenders Monday to discuss the RBI approval for the restructuring.
Now the airline will present the FRP to the Finance Minister Pranab Mukherjee-led group of ministers (GoM) which is looking into the airlines' turnaround and financial restructure plan.
The FRP envisages restructuring of the Rs.42,923.16 crore debt the airline has accumulated for working capital and aircraft acquisition from a consortium of banks, which includes State Bank of India, IDBI and Bank of Baroda.
The airline's board also decided to lease out the excessive capacity that it has on 747 and 777-200 aircraft, after the carrier inducts the Boeing 787 Dreamliner aircraft.
"The board also decided that Air India may lease out excess capacity of two 747-400 aircraft and some 777-200 LR aircraft (at a future date), after the induction of B787," the statement said.
The decision for purchase of 27 Dreamliners is pending with the union cabinet.
The board also decided to sell and lease back its 787, if it gets permission to buy them. Under the model, aircraft are sold to a lessor, who immediately leases back the aircraft to the airline. The transaction is said to give the company extra funds, and the airplane can also serve as collateral for loan.
"The board also approved the issue of request for proposal (RFP) for 787 aircraft under sale and lease back mechanism pending a final clearance from government of India (GOI)," the statement added.
The airline's board further decided on some cost-cutting measures like removing of standard food items on a flight of less than 90 minutes. The food items would be replaced by heavy snacks, said an airline official.
"For flights less than 90 minutes, the standard food items like breakfast, lunch or dinner will be replaced by heavy snacks and soft drinks," an Air India official told IANS.
Other issues like route rationalisation, cabin restructuring and human resource (HR) integration, were also discussed. But the key issue of voluntary retirement scheme (VRS) was left out, said the official.
The meet comes in the wake of an expected decision by GoM to provide further equity of Rs.6,750 crore into the airline and to review the airlines' turnaround plan.
The government has so far infused fresh equity of Rs.3,200 crore into the airline.
Currently, the national carrier has a total debt of Rs.43,777 crore, including loans and dues it owes to vendors like oil firms and airport operators.
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