The sovereign guarantees for Air India are being awaited for until next week in order for loans to be properly backed up with a total of Rs 2500 crore. This was confirmed by a senior executive last Friday.
The state run airline had established ties with nine other banks to raise funds to cover the debt and the government shortfall and increase its finances. Currently, Air India had been surviving on cash handouts from the state. It announced losses since 2007 after it had failed to derive the benefits from a merger with domestic carrier Indian Airlines.
Another avenue that was hit was the soaring fuel prices, increasing interest costs, cutthroat competition and internal issues such as hyperinflated salaries as well as the burden of plane orders worth USD15 billion.
According to a top airline official, "Air India hopes to close the non-convertible debentures within two to three weeks of getting all clearances. The airline plans to appoint merchant bankers soon to market the NCD. It is likely to be subscribed by pension funds, EPFO and financial institutions."
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