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Aviation  

Centre to act as guarantee for Rs 5500 cr loan to Nacil

 
9/15/2009 01:30:00 PM
AIR INDIA

Mumbai, Sep (EPC News): The Centre has given nod to act as a guarantee for Rs 5500 crore loan by the National Aviation Company of India (Nacil) to buy 21 aircraft from Airbus. The government has issued the letter of guarantee last month.

Bank officials stated that the government has approved to guarantee repayment of interest and principal component of the loan. The loan has 13-year tenure. For the first year, Nacil will have to pay only its interest liability. From the second year onwards, the flag carrier will start repaying the principal amount along with the interest.

IDBI was the lead bank which arranged the loan for the ailing airline company. IDBI and Punjab National Bank together had sanctioned around Rs 500 crore each while Canara Bank has agreed to lend approximately Rs 1,000 crore. Other lenders include Union Bank of India, Bank of Maharashtra, Central Bank of India and Allahabad Bank.

Lenders were apprehensive of extending a loan to Nacil without government guarantee, considering the company’s weak financials as it recorded loss of Rs 5,000 crore In financial year 2008-09.

Nacil is purchasing new aircraft to replace Air India’s ageing fleet. Lenders said the fleet replacement will help Nacil reduce operational costs as the new aircraft will not only be fuel-efficient, but will also be better equipped in terms of safety.

 
 
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