Air India to borrow Rs 18,000 crore from SBI, BoB: Report

Air India, owned by Tata Group, will borrow Rs 18,000 crore from State Bank of India (SBI) and Bank of Baroda (BoB) to refinance its existing debt over the short term. The loans would be in the form of one-year loans. Tata Group plans to raise longer tenure loans later this year too. 

According to a report in the Economic Times, these loans are a continuation of the debt facility that the company availed after it took over the airline. The report added that the company decided to continue with the current borrowing arrangement for another year. They are likely to make another long-term strategy, it said. The loans are at a higher rate than last year, as per the report. 

A person in the know told the daily that restructuring operations, following the takeover, are still taking shape within the airline. The company reportedly wants to complete all formalities before they look at firmer banking partnerships, which is expected to be long-term in nature and a mix of public and private sector banks. 

Meanwhile, the company is also working to merge its various aviation units, including AirAsia and Vistara. It is also planning investments in new aircraft, refurbishing existing ones, and overhauling systems and its network. 

Last year, Tata Sons had taken a Rs 10,000 crore loan from SBI and Rs 5,000 crore loan from BoB at an interest rate of 4.25 per cent. Since Reserve Bank of India raised its repo rate since, the new loans are pegged to be at 6.50 per cent. 

Also read: Air India completes one year with Tata Group; CEO says progress has been ‘nothing short of stunning’