A major portion of the ₹980-crore equity infusion promised to Air India by the Centre will go towards payment for the airline’s non-convertible debentures ( NCDs) which mature at the end of September.

Air India, which is hoping to receive ₹980 crore in a few days, plans to use about ₹500 crore of this to settle its NCD claims. Sources said the remaining money will be used to settle vendors’ dues and other payments.

The ₹980 crore is part of the over ₹ 31,000 crore promised by the Centre to the Maharaja for its turnaround plan. Tabling the first batch of supplementary demand for grants for 2018-19 last month, Minister of State for Finance Pon Radhakrishnan had said the Centre proposed to make an equity infusion of ₹980 crore in Air India under the turnaround plan devised for the carrier.

The airline had received ₹1,500 crore on August 22 from Bank of Baroda, which it used to settle interest outstandings with banks that stood at ₹600-650 crore. The ₹1,500 crore has to be repaid in a year, although sources indicated that the repayment period could be extended.

New engines

Some funds were also used to settle vendor dues, including payment for engines. Air India hopes to receive engines for both narrow body and wide body aircraft in its fleet. It has over 100 aircraft in its fleet, which includes the narrow body Airbus A-320 family and wide body models such as the Boeing 787 and Boeing 777.

Air India also plans to sell around 20 properties across the country, which should raise about ₹500 crore. The sale is likely to begin in two weeks.

Next month, the airline will hold a series of board meetings to clear the accounts of its various subsidiaries, before moving to its own, for 2017-18. Air India’s financials for 2017-18 are likely to be cleared by its board towards the middle or third week of September.

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