21 Apr 2012

Government Approves Financial Restructuring and Turn Around Plan of Air India National Carrier to get an Upfront Equity Suuport of Ruppees 6750 Crores

12-April-2012:The Cabinet Committee on Economic Affairs today approved the Turn Around Plan (TAP) and Financial Restructuring Plan (FRP) for Air India.The Minister informed in a Press Conference that the Cabinet Committee on Economic Affairs (CCEA) has taken up the issues relating to TAP and FRP of Air India today and decided to approve them.

The approval of the TAP and FRP by the CCEA would help Air India in getting (i) upfront equity support of Rs.6,750 Crore, (ii) GOI Guarantee for repayment of Principal amount and payment of Interest on the Non-Convertible Debentures of Rs. 7400 crore proposed to be issued to financial institutions, Banks, LIC, EPFO etc. and used to repay part of Working capital loans, (iii) equity for Cash deficit support of Rs.4,552 crore till FY 2021, (iv) equity for already guaranteed aircraft loan of Rs.18,929 Crore till FY 2021, (v) Induction of already contracted for aircraft which include 27 B 787 and 3X B777-300ER on a sale and lease back basis. 

The banks have also approved conversion of short-term/working capital loan of Rs. 11,000 crores into long-term loan. 

TAP and FRP had been prepared by the management of Air India in consultation with SBI Caps and vetted by an independent consultant M/s 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 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, The Minister added. An Oversight Committee shall be constituted to monitor and ensure that the milestones are achieved before the release of tranches. 

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