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Oct 12th 2021

Air India

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Financial risk profile of the company continues to remain weak due to accumulated losses, high debt levels, and negative net worth and cash accruals. However, it is a government backed bond the credit risk remains zero despite any deterioration in financial health.

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C S S Nikhil Bhargav

Air India is the flag carrier airline of India, which is completely owned by Government of India (prior to the sale to Tata Sons). The airline currently operates in domestic and international routes with market share of 13%. Air India has five wholly owned subsidiaries which provide passenger transport, cargo transport, ground-handling services, aircraft maintenance repair and overhaul services, and hospitality and catering services. This bond is a government guarantee throughout the tenor.

List of material covenants

-   The unconditional, irrevocable and continuing guarantee by the Government of India inter alia for payment of principal and the interest thereon throughout the tenor of the Bonds.

-    The agreement for Guarantee to be entered into between the GOI and the Trustee pursuant to which the GOI shall provide the Guarantee.

-    The liability under the above said guarantee shall not be affected by any infirmity or irregularity on the part of AIL to undertake any of its obligations under the NCD programme.

Credit negative factors

-    Change in payment structure by the Government.

-    Delay in payments to the trustee account

Financials -

Financial risk profile of the company continues to remain weak due to accumulated losses, high debt levels, and negative net worth and cash accruals. However, it is a government backed bond the credit risk remains zero despite any deterioration in financial health. Total accumulated loss as of Fy20 stood at Rs. 708 billion.

 

 

 

 

 

Of Total Expenditure %

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Fleet Size as of Fy20

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Air India had taken delivery of 6 Boeing 787 and 1 Boeing 777 -300 ER aircraft during the period November 2016 to March 2018. Air India had raised USD 819 Million through Bridge financing from consortium of various foreign lenders and Offshore branches of Indian banks. As the process of disinvestment had commenced, it has been decided to defer the long-term financing for these aircraft and Bridge facilities were rolled over multiple times during the last 3 years. As the existing Bridge lenders were not in agreement to further extend these Bridge facilities, it was decided to refinance the same through short term INR loan with maturity of one year to be backed by aircraft security and Governemnt Guarantee as collateral. Air India has raised Rs. 34 billion from two Indian banks and concluded refinancing of 4 aircraft during the month of December 2020.

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Information herein is believed to be reliable but Arjun Parthasarathy Editor: INRBONDS.com does not warrant its completeness or accuracy. Opinions and estimates are subject to change without notice. This information is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The financial markets are inherently risky and it is assumed that those who trade these markets are fully aware of the risk of real loss involved. Unauthorized copying, distribution or sale of this publication is strictly prohibited. The author(s) of the content published in the site INRBONDS.com may or may not have investments in the assets discussed in the pages/posts.

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