New Delhi/Mumbai, May 21 (IANS): National carrier Air India Saturday said it will make within a week the defaulted interest payment on the Rs.200 crore working capital loan it took from banks.
"We have made most of the interest payments to banks, and the concerned payment would also be made soon," a senior Air India official told IANS from Mumbai, adding that the company would also pay the penalty on the default.
According to the official, the company was trying to fund the payments through internal resources.
The senior official also added that the payment default was caused by huge revenue losses that occurred due to a 10-day strike, by the company's pilots which ended earlier this month, that crippled the airline's domestic operations.
The strike caused the cancellation of 1,600 flights and a cumulative revenue loss of around Rs.150 crore to the company.
The debt-ridden carrier recently sent a proposal to the civil aviation ministry seeking its permission to convert its short term loans amounting to Rs.18,000 crore into long-term ones, thereby saving interest payments of around Rs.600 crore.
"We are going to convert these loans as soon as the proposal sent to the civil aviation ministry is cleared," said 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 proposals that have been sent to the ministry are a part of our turnaround plan and will help in reducing high interest rate payments," the official said.
The flag carrier also sent another 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 proposals are part 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 payments per annum add up to Rs.3,200 crore, including Rs.1,800 crore for the 111 aircraft which it ordered since 2006.