The Air India Crisis, a new chapter.

By Ankur Deo | December 20, 2019

Air India has ran into new problems after the Chairman, Ashwani Lohani warned of flight disruptions and possible invocation of government guarantee because of delays in fundraising and refinance of aircraft debt. The Air India crisis keeps unfolding with new problems added almost on a daily basis. Lets have a look back;

Air India had received an offer from a consortium of four banks for $819m bridge loan taken for acquiring six Boeing 787 Dreamliners and one Boeing 777 aircraft. A bridge loan is a short term loan which is backed by some property (in this case, the mentioned aircraft). The government guarantee in respect to the bridge loan will expire on December 27, 2019,  and the airline has sought help from the government to refinance it before end of the month. In a situation that AI is unable to repay the loan, the airline might as well risk the ownership of the aircraft bought against this loan. AI has accumulated a staggering loss of Rs.8556cr ($1.4b) in the last financial year and continues to bleed as it is losing about Rs.4cr ($800k) every day.

“The overall financial situation of the airline is grossly untenable and it may not be able to sustain physical operations in the absence of immediate government intervention and support”, quoted Lohani after he wrote to the civil aviation ministry last week seeking for fresh funds.

Image Credits: Air India

The desperation of the airline officials could clearly be seen as Lohani posted on Facebook last week, saying that ‘The airline needs to survive before it is sold’. As the government plans to sell hundred percent stake in Air India next month, it has not yet approved the Rs.2400cr loan that AI had sought, as we had reported in our recent article titled: ‘Mayday Mayday: The crisis at Air India’, which would help reinstate some of that lost optimism in the airline’s future.

The airline is literally hanging by a thread, and if the government refuses to infuse any more funds, the future might not be very bright for India’s flag bearer.

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