The Hindu Business Line : Air India to seek Rs 1,000-cr soft loan

Hyderabad, Oct 15 Air India, which is planning a major expansion of its international route network between October 2009 and March 2010, will soon approach the Government for a soft loan of about Rs 1,000 crore.

Speaking to Business Line, the airline’s Chairman and Managing Director, Mr Raghu Menon, said that Air India is hoping to get the funds at terms which will not only allow a moratorium on repayment for the first three years, but also at lower rates of interest spanning across 12 to 15 years.

While Air India has already sent a proposal to the Government seeking funds to enhance its equity base to Rs 1,500 crore, the proposal seeking a soft loan will be sent to the Government soon.

The loan is to be used for a variety of measures, including upgrading the IT system in order to be able to host both Air India and Indian flights on the same system.

Currently, despite the merger having begun, the two airlines are unable to host their flights on a common platform.

The IT upgrade will also help the airline install systems for more optimum aircraft operations which will help save fuel worth more than $200 million annually.

From October 2009, Air India will look to expand its international network so as to operate flights to South Africa, Australia and non-stop flights to the West Coast of the US apart from strengthening its presence on existing international routes.

“This will be possible because Air India will have inducted at least 68 brand new aircraft,” Mr Menon said.

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