Mumbai, Mar 27: Ailing national carrier Air India today decided to import aviation fuel directly to save cost, apart from taking a bridge loan facility worth USD 195 million (about Rs 1,000 cr) from Standard Chartered Bank India for two of its 27 Dreamliners to be delivered to it shortly.
“The Air India Board, which met here today has decided to import aviation fuel directly. Towards, it has been decided to shortly appoint a service provider to source fuel supply as well as provide the necessary infrastructure for storage and distribution of fuel for in-plane fuelling,” an official statement said here this evening.
The airline is also expecting to close the bridge loan of USD 195 million from the domestic arm of the British lender shortly, the statement said.
As part of the risk management strategy, the Board also approved hedging of ATF up to 20 percent of its international intake and also allotted a specific amount for this in its budget, the statement said, adding a risk management team of senior officials has been set up to monitor and take positions in fuel hedging.
However, the quantum of funds allocated could not be known immediately.
The board also approved a capital budget for the next fiscal, involving a capital outlay of over Rs 400 crore on non-aircraft projects. The revenue expenditure budget estimates for the next fiscal was also approved.
The board also took on record the progress on restructuring of the working capital into long term loans, whereby Rs 11,000 crore worth of working capital loan will be converted into long-term debt and Rs 3,400 crore into cash credit facilities.
In January, the Reserve Bank had approved an Rs 18,000-crore CDR proposal for the carrier, which includes a sovereign guarantee for an issue of Rs 7,400 crore worth non-convertible debentures.
The airline is expecting an equity infusion in the next fiscal, which will not only improve its operating as well as financial parameters, but would also give considerable comfort to the institutional lenders in the form of better net worth.
Meanwhile, Air India's operating and financial performance upto February has registered a continuous increase compared to the performance last year.
Passenger revenue in February went up to Rs 949 crore from Rs 718 crore year ago, registering a 32.2 per cent increase, it said.
The total number of passengers who flew on Air India also went up from 96.2 lakh last February to 1.09 million this February, registering an increase of 13.4 percent, it said.
The airline, which is sitting on a debt of Rs 67,000 crore—a mix of aircraft purchase loans, working capital loans and accumulated loss over the years, expects to end the year with higher than budgeted performance in revenue.
However, the escalating cost in fuel is likely to result in an additional outgo of Rs 2,200 crore and its fuel bill is estimated to be around Rs 8,000 crore for the outgoing fiscal. The flag carrier is set to close this fiscal with a loss of nearly Rs 6,800 crore.
Besides this, additional interest cost of Rs 1,500 crore, has also eroded the profitability of the airline, the statement said.