Ashwini Phadnis

New Delhi, Nov 11 National Aviation Company of India Ltd’s decision to go in for refinancing of its Exim loan for purchase of 17 Boeing aircraft would help it save close to $1.5 million per month in interest payment alone, a senior official said on Friday.

The company’s exposure for the 17 Boeing aircraft and two spare engines is estimated at around $1.4 billion. NACIL is the entity into which Air India and Indian have been amalgamated following the Government’s decision to merge the two state-owned airlines.

The saving would be for the first tranche of 68 Boeing aircraft that Air India is to acquire before December next year.

High interest rates

Official sources told Business Line that owing to the sub-prime lending crisis in the US, NACIL was paying very high interest for the loan. “Every time the airline went to the bankers seeking to roll over the loan the lenders were hiking the interest rate. There was a period when the airline was being charged Libor plus 275 basis points. The refinancing is a big relief as almost 85 per cent of the loan is now available at sub-Libor rates,” sources said.

It was in early-October this year that NACIL signed an agreement with Exim Bank for financing support for the 17 aircraft, thereby paving the way for it to seek funds at softer rates.

(This article was published in the Business Line print edition dated November 12, 2007)
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