Air India will get a sovereign guarantee from the government in the next few days for the $300 million that it plans to raise through External Commercial Borrowing (ECB), a senior government official said on Wednesday.

The ₹1,800 crore that is expected to come in thus will be employed for maintenance on the national carrier’s aircraft, thus making available more planes and adding to the Maharaja’s current operational fleet.

How it helps the Maharaja The availability of a sovereign guarantee will ensure that the state-owned airline is able to get the funds at competitive rates.

At the moment, Air India has 62 narrow body aircraft from the Airbus A320 family, but due to lack of maintenance and spares, it is able to use only 59 of these aircraft, sources said.

Air India’s move to seek these funds comes in the backdrop of the government providing a window of opportunity to raise funds from international markets to make it easier for domestic airlines to operate in the Indian market.

Borrowing limits The proposal, which was first announced in Union Budget 2012-13 and was valid till March 2013, was subsequently extended till March 2016.

The ECB ceiling for the entire civil aviation sector is $1 billion and the maximum permissible ECB that can be utilised by an airline company is $300 million. This can be raised with a minimum average maturity period of three years. While at least two private sector players – Jet Airways and GoAir – have made use of this facility, this will be AI’s first attempt to use the ECB route for raising funds for maintenance, the official said.

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