Loan Deal Details
Air India has successfully secured fresh funding of about 215 million dollars from Standard Chartered and Bank of India. The loan was raised through Gujarat International Finance Tec City, better known as GIFT City, and carries a tenor of six years. It has been priced at around 168 basis points over the secured overnight financing rate, aligning with global standards of aviation financing.
Purpose of the Loan
The proceeds from the loan will be used to refinance earlier short duration debt that was taken to acquire six Boeing 777 300ER aircraft. This refinancing move is expected to ease repayment pressure on the airline while aligning its financial obligations with longer term cash flow generation. The strategy demonstrates Air India’s focus on maintaining financial discipline as it continues with its fleet expansion and modernization.
Banking Milestone
For Bank of India, the transaction marks a notable milestone as it acted as a mandated lead manager for the first time in a loan deal originating from GIFT City. Standard Chartered also played a significant role as co lender in the deal, underlining the confidence international and domestic banks have in Air India’s turnaround strategy under the Tata Group.
Background and Market Context
Air India has been actively restructuring its financial position since its acquisition by the Tata Group. The airline has been securing new funding to support its aggressive expansion plans which include purchasing hundreds of new aircraft from Boeing and Airbus. Bloomberg had reported in July that Air India was in the market for a 200 million dollar loan, and the latest deal not only fulfills that requirement but exceeds it.
The financing comes in the backdrop of a challenging year for aviation in India. An Air India crash in June had temporarily slowed down funding talks and raised concerns among lenders. However, the successful closure of this loan shows the resilience of the airline’s financial strategy and the trust banks are placing in its growth potential.
The Bigger Picture
With this refinancing, Air India has strengthened its balance sheet and created breathing space for further expansion. The deal also underscores the growing role of GIFT City as a global financial hub capable of handling large scale aviation and infrastructure financing. For the airline, it is another step forward in its mission to rebuild itself into a world class carrier while reducing financing costs and securing long term stability.
Stay updated with the latest developments in aviation, finance, and markets. Follow You Finance on Instagram and Facebook for real time updates and insights.
