Air India board approves issue of preferential shares to lenders

December 29th, 2011 - 11:21 pm ICT by IANS  

Pranab Mukherjee New Delhi, Dec 29 (IANS) National carrier Air India Thursday said that its board has, under its financial restructuring plan, approved the issue of preferential shares to be allotted to the airlines’ lenders.

“As a part of the financial restructuring plan, the board has approved the rearrangement of authorized share capital by issue of preference shares worth Rs.7,500 crore, which are proposed to be allotted to the lenders of the working capital,” the company said in a statement after the board meeting here.

However, the airline is still awaiting the go-ahead to implement the FRP and turnaround plans from Finance Minister Pranab Mukherjee-led group of ministers (GoM) which is looking into the matter.

The airline said that the ministry of civil aviation has floated a cabinet note, asking for further equity infusion in the airline.

“A cabinet note is being moved by the ministry of civil aviation for equity infusion and approval of financial restructuring plan (FRP),” the statement said.

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 GoM is also expected to decide on 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.

It has aircraft acquisition loans worth Rs.21,412.06 crore and Rs.21,511.10 crore in working capital dues, while it also owes huge amounts to various vendors.

The statement reported a 12 percent increase in revenue in November as compared to the corresponding period of last year.

The passengers carried in last month also increased by 7.7 percent as compared to November 2010.

“The key performance indicators for April to November 2011 have also shown an improvement as compared to the corresponding period of last year in terms of passenger revenue, passenger carried and yield,” the statement added.

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