The Ministry of Finance recently approved the unconditional and irrevocable guarantee for Air India’s NCD bonds for Rs 7,400 crores. The airline will now credit rate the NCD bond based on the guarantee issued by the government. The NCD will have tenure of 19 years spread over the applicable government security. The government has capped the spread at 70 basis points. The proceeds of the NCD will be used to repay the short term working capital facility availed by the national carrier from the 19 banks. Air India will also be able to save on the interest cost by retiring this debt. The banks will now have a reduced exposure to Air India after the said short term loan is paid out by the airline. Meanwhile, Air India’s restructuring programme is on track with the airline achieving the milestones set under the Turn Around Plan. It’s on time performance was nearly 86 per cent in September and the passenger load factor has shown an upward trend to 71.8 per cent.
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