By KARTHIKEYAN SUNDARAM (BLOOMBERG)
Air India Ltd., the unprofitable state-owned carrier supported by government bailouts, plans to raise as much as $1 billion in loans from overseas for working capital.
The airline will also look into other “innovative structured financing packages” to reduce financing costs, according to an April 13 tender document posted on its website. The Mumbai-based company is seeking loans of one year or more from Indian and foreign banks, according to the document.
Air India is the first carrier to turn to overseas markets for working-capital loans after Finance Minister Pranab Mukherjee last month allowed airlines to borrow from abroad for such requirements. Private carriers including Kingfisher Airlines Ltd. are also seeking investment and new funds as they struggle with losses amid fuel costs and a price war.
India’s federal government on April 12 approved a turnaround plan for Air India that included recasting working-capital loans to help the airline save about 10 billion rupees ($194 million) in yearly interest expenses, Aviation Minister Ajit Singh said in New Delhi.