Backed with a sovereign guarantee, Air India has started availing loans worth $ 300 million via external borrowing window and has taken at least $ 40 million so far.
The debt-laden national carrier will borrow $ 300 million in eight tranches in the current financial year ending March 31, 2016.
Sources said the airline has already taken $ 40 million and the same quantum would be availed in five more tranches over the coming months.
Then, the remaining $ 60 million would be taken in two tranches of $ 30 million each, they added.
At current exchange rates, $ 300 million would be about Rs 1,985 crore while $ 40 million translates to around Rs 265 crore.
The central government is providing guarantee for the ECB amount, which would primarily be used for maintenance of aircraft and to meet working capital needs.
This is also the first time Air India is raising funds via the ECB route.
The fund raising by Air India will come under the overall $ 1 billion ECB ceiling for the civil aviation sector. The maximum permissible ECB that can be availed by an individual airline company is $ 300 million.
Already, Jet Airways and Go Air have raised funds through the ECB route in recent times. The Reserve Bank of India has extended the ECB window for airlines by one year till March 2016.
In the red for sometime, Air India has a debt burden of over Rs 40,000 crore and is surviving on a bailout package approved in 2012.
Air India was allocated Rs 2,500 crore in the Union Budget for 2015-16. However, this amount was well short of nearly Rs 4,300 crore sought by the Civil Aviation Ministry for the national carrier.
To make up the shortfall, the Ministry had sought Rs 1,800 crore through supplementary demand for grants.
As per the supplementary demand for grants, an additional Rs 800 crore equity infusion would be made in Air India.
The UPA government had approved Air India’s turnaround plan in April 2012, with a committed public funding of Rs 30,231 crore, staggered over a period of nine years, with some specific riders.
Last fiscal, the airline reduced its losses to Rs 5,547.47 crore.
Since the implementation of TAP/ Financial Restructuring Plan (FRP), the operating loss has reduced from Rs 5,138.69 crore in the 2011-12 fiscal to Rs 2,171.40 crore in the year ended March 31, 2015.
Net loss has come down to Rs 5,547.47 crore in 2014-15 from Rs 7,559.74 crore in 2011-12, the Civil Aviation Ministry had said recently.