Tata-owned Air India in talks with multiple banks for Rs 3,000-cr loan: Report

Tata group-controlled Air India is in talks with multiple commercial banks for a Rs 3,000-crore loan, which it is seeking to make down payments to lessors under sale-and-leaseback (SLB) agreements, a report said on Thursday.

The carrier, as per sources quoted in the Business Standard report, has reached out to multiple lenders in connection with the loan. A State Bank of India executive has said several lenders are willing to extend the loan. The loans will be in addition to the investment made by the Tata Group in the company.

The sale-and-leaseback framework guidelines note that a new aircraft is sold to a lessor, which then immediately leases it back to the airline, helping the carrier free up its cash flow.

Tata Sons had acquired a 100 per cent stake in loss-making Air India on January 27, 2022, through its fully owned subsidiary, Talace Private Limited. Later, it announced that Air India and Vistara will be merged into one entity, which is estimated to be completed by March 2024. Singapore Airlines will have a 25 per cent stake in the newly merged entity.  

Apart from this, Air India Express and Air Asia India will also be merged to create a single low-cost carrier airline.

The cash-strapped carrier had placed a huge order for 470 aircraft in February this year. Of these, 250 aircraft were ordered from the European planemaker Airbus and the remaining 220 were ordered from American company Boeing. The cost of these 470 aircraft is around $70 billion.

The order for Boeing has 190 B737 MAXes, 20 B787s, and 10 B777s aircraft. The Airbus order comprises 210 A320 family and 40 A350 planes. A350, B777, and B787 are wide-body aircraft that have bigger fuel tanks.

Air India has 113 aircraft in its fleet currently.  

Earlier this month, Air India said its total accumulated losses at the end of FY23 are reportedly pegged to be at Rs 14,000 crore. The accumulated losses include write-offs on old aircraft and engines. An impairment cost of around Rs 5,000 crore is estimated due to Air India’s aging planes and engines, as well as Rs 1,500 crore against AirAsia India. 

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