Key Points of Air India Loans From SBI – BOB:
- Air India has secured funds worth Rs 14,000 crore from State Bank of India and Bank of Baroda.
- The funding was raised through a combination of fresh loans and refinancing of existing debt.
- Rs 12,500 crore was earmarked for refinancing loans while the remaining Rs 1,500 crore was obtained through the pandemic-era Emergency Credit Line Guarantee Scheme (ECLGS).
- The funds will be used to support the airline’s upcoming expansion plans into both domestic and international markets with leased aircraft and new planes.
- The borrowed funds are also expected to be used to finance the payout for the voluntary retirement scheme (VRS), which is estimated to cost over Rs 200 crore.
- Air India has ordered a total of 470 aircraft from Boeing and Airbus as part of its expansion plan.
- The loans from SBI and BoB are benchmarked to State Bank of India’s six-month marginal cost of funds-based lending rate (MCLR) and are priced 50 basis points (bps) above it.
Details of Air India Loans From SBI – BOB:
Air India, owned by the Tata group, has reportedly secured funds worth Rs 14,000 crore from State Bank of India and Bank of Baroda. According to sources cited in a Livemint report, the funding was raised through a combination of fresh loans and refinancing of existing debt. Of the total amount, Rs 12,500 crore was earmarked for refinancing loans while the remaining Rs 1,500 crore was obtained through the pandemic-era Emergency Credit Line Guarantee Scheme (ECLGS). The funds will be used to support the airline’s upcoming expansion plans into both domestic and international markets with leased aircraft and new planes.
The borrowed funds are also expected to be used to finance the payout for the voluntary retirement scheme (VRS), which is estimated to cost over Rs 200 crore. The new VRS round has been offered to all permanent general cadre officers who are at least 40 years old and have completed at least five years of continuous service at Air India.
Air India has ordered a total of 470 aircraft from Boeing and Airbus as part of its expansion plan. In FY22, the airline had a total debt of Rs 15,317 crore, which was down from Rs 45,037 crore in FY21, according to disclosures in its consolidated financial statements for FY22.
The Tata group took control of Air India, Air India Express, and ground handling service provider AI SATS in January 2022 from the government after paying Rs 2,700 crore in cash and taking over Rs 15,300 crore of debt of the national carrier.
The loans from SBI and BoB are benchmarked to State Bank of India’s six-month marginal cost of funds-based lending rate (MCLR) and are priced 50 basis points (bps) above it.
About Air India:
Following the completion of the sale, Air India is now owned by Talace Private Limited, a fully-owned subsidiary of Tata Sons. The airline is the national flag carrier of India and has its headquarters located in New Delhi.
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