Government turns down Air India’s LoC request

Victoria
By Victoria October 10, 2011 08:44

Government turns down Air India’s LoC request

The Indian finance ministry has turned down Air India’s request seeking letter of comfort (LoC) for increasing the buyers’ credit limit to $288 million from Standard Chartered Bank.

The ministry is reported to be waiting for the report of committee of officers on Air India’s turnaround and the financial restructuring plans before considering approving a LoC.

The group of ministers (GoM) headed by finance minister Pranab Mukherjee has asked government officers to examine the airline’s revival plan before recommending any financial assistance in the form of soft loan or equity.

The GoM will meet this week to consider Air India’s turnaround plan prepared by consultancy firm Deloitte.

This is a further blow for Air India, which may struggle to pay salaries and maintenance costs.

Meanwhile, private airlines in India have requested the government allow them to raise fares as they are bit by ever-mounting losses and high debts.
Representatives of private airlines have met senior government officials in the finance and civil aviation ministries to explain their financial situations and to request raising fares. The airlines are also expressing their dissatisfaction with the way the governing is propping up state-owned Air India, while their sector suffers.

Victoria
By Victoria October 10, 2011 08:44
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