Air India makes turnaround pitch to bankers

April 8th, 2011 - 8:03 pm ICT by IANS  

Pranab Mukherjee Mumbai, April 8 (IANS) Beleagured flag carrier Air India made a strong pitch of its turaround plan before bankers here Friday as financial restructuring is at the core of making it operationally profitable by 2015.

Over three hours, chairman and managing director Arvind Jadhav told the representatives of some 20 banks that the carrier hopes to enhance its revenues by Rs.5,000 crore and reduce costs by Rs.4,000 crore annually towards the goal.

The bankers agreed to form a small group within the consortium in this regard.

Jadhav - who technically oversees the state-run National Aviation Company of India, which owns brand ‘Air India’- said the turnaround and restructuing plan had the full approval of its board.

It was prepared by SBI Caps, the financial services arm of the State Bank of India, and vetted by global consultancy Deloitte. He said he was now seeking the full support of banking partners to take it forward.

The plan includes support of the consortium of bankers.

The plan includes equity infusion, conversion of short-term loans to longer tenures, cut in interest rates, operationalisation of maintenance unit and ground handling arms, and resolving merger issues with the erstwhile Indian Airlines.

“The support of our bankers to Air India’s rejuvenation strategy would lead to expected approvals from the Reserve Bank of India (RBI) and the principal stakeholder - the government of India,” Jadhav said.

Those at the meeting included Joint Secretary (Civil Aviation) Prashant Sukul, top representatives of SBI Caps including Managing Director S. Viswanathan and Syndicate Bank chairman and managing director Basant Seth.

The cash-strapped airline had earlier reported a decrease in its net loss for fiscal 2009-2010, which stood at Rs.5,551 crore against a net loss of Rs.7,189 crore in fiscal 2008-2009.

Last-year, the central government had infused Rs.2,000 crore of fresh equity into the flag-carrier in two instalments of Rs.800 crore and Rs.1,200 crore.

Finance Minister Pranab Mukherjee, in his 2011-12 budget, had said: “As a part of the process for financial restructuring of National Aviation Company of India, an amount of Rs.1,200 crore has been provided.”

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