The state-owned carrier got default notices from banks, aircraft lessors. As reaction, Air India has sought 21.21 billion rupees (US$309 million) of additional equity from the government for the fiscal year 2018-19 to make pending payments to its vendors, Reuters quoted a source at the airline as saying.
Air India owes about 18 billion rupees to its
vendors, including lessors and banks that have demanded payment from the beleaguered airline, after the government's unsuccessful efforts to find a buyer for its 76% stake earlier this
year.
The Business Standard newspaper meanwhile reported that three banks and two aircraft leasing firms have served default notices on Air India over the last few weeks, raising concerns about the
government-owned carrier's state of finances and credit-worthiness.
San Francisco-based Wells Fargo Trust Services and UAE's state-owned Dubai Aerospace Enterprise (DAE) have sent letters of demand for pending rental payments, the newspaper said, citing
sources.
Turning into a non-performing asset
A DAE spokesman told Reuters that they were not owed US$10 million by Alliance Air, and that they had not issued a notice of default to Alliance. Alliance Air is a unit of Air India that operates
regional flights to smaller towns and cities in India. Air India was not immediately available to comment on the report, while Wells Fargo could not be reached outside usual U.S. business
hours.
Three lenders from a 22-bank consortium, including Standard Chartered Bank, Dena Bank and Bank of India Ltd., have also written to Air India raising concerns that the company is turning into a
non-performing asset, Business Standard said in its report.
State seems to step in again
According to a statement by Junior Civil Aviation Minister Jayant Sinha, the government will continue to support the loss-making airline's financial requirements while it works on alternatives,
although he didn't give a specific timeline for a new plan.
Meanwhile, sources indicated that the airline expects to receive the additional equity within the next 7 to 10 days after which it will be able to clear all dues. If granted, the additional
equity is above the 6.5 billion rupees it has already received for the year.
"Wait till the end of August. The government will give us money and then we will pay you. Please do not take any legal action has been the national carrier's response," the Business Standard
quoted an executive working for one of the lenders as saying.
Nol van Fenema
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