New Delhi, May 20 (IANS): Debt-ridden national carrier Air India Thursday said that it has sent a proposal to the civil aviation ministry for its permission to convert its short term loans amounting to Rs.18,000 crore into long-term ones, thereby saving interest payments around Rs.600 crore.

"We are going to convert these loans as soon as the proposal sent to the civil aviation ministry is cleared," a senior Air India official told IANS from Mumbai.

According to the official, the interest payment saving on these short-term loans taken for bridging operational funding and acquisition of few aircraft would be around Rs.600 crore.

"These proposal sent to the ministry is a part of our turnaround plan and will help in reducing high interest rate payments," the official said.

The flag carrier had also sent a a proposal to the ministry for permission to raise Rs.5,500 crore by issuing bonds to a consortium of banks, to help restructure its long-term debts.

The moves are component of the company's turnaround plan, which envisages to save around Rs.800 crore in interest payments it makes on a part of Rs.40,000 crore loans it took for aircraft acquisition and working capital requirement.

Air India's cumulative interest per annum accounts to Rs.3,200 crore, including Rs.1,800 crore for the 111 aircraft which it ordered since 2006.

Earlier, Air India chairman and managing director Arvind Jadhav said the revival plan will focus on equity infusion, shift to long-term loans, interest cuts, making repair and ground-handling operations into separate entities, and resolving integration issues.

Under the plan prepared by global consultancy firm Deloitte and SBI Caps, the flag carrier intends to save around Rs.900 crore on interest payment by converting 60 percent of its short-term loans on which it pays anywhere around 10 percent to 12 percent interest to long-term loans, which have slightly lower interest rates.