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Air India's lenders will take a call on whether to convert some of the airline's debt into equity as part of the airline's financial restructuring plan. The proposal is among 20 others given to the lenders.
“We have given our proposals to the lenders and now we have to wait for them to come back to us with their suggestions. We will finalise the financial restructuring plan after that. Among the proposals given to them we have also suggested converting some of the debt into equity,” said a spokesperson for Air India.
The airline has set a target to boost revenues by Rs 5,000 crore and cut costs by Rs 4,000 crore a year to bolster its finances. However, it has a debt burden of close to Rs 40,000 crore out of which Rs 18,000 crore is a working capital loan.
According to sources, the lenders are meeting on Thursday to discuss the airline's proposals, which include converting 60 per cent of the Rs 18,000-crore short-term debt into long-term debt. If the bankers agree on the proposal, it will reduce Air India's yearly loan repayment burden to Rs 700 crore against Rs 1,200 crore now.
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