Air India (AI, Mumbai Int'l) is seeking offers from domestic lenders to provide it with a one-year loan amounting to INR2.25 billion rupees (US$30.8 million), to refinance its working capital, according to tender documents.

The short-term loan would carry a sovereign guarantee and would also be secured by 18 of its aircraft. Bids are due by January 27, and the already heavily indebted carrier would need to receive the loan by January 31, the document said.

The move comes amid a repeatedly delayed privatisation process to sell the government’s 100% shareholding in the airline, which has been loss-making since 2007. Indian conglomerate Tata Sons and a group of 209 employees led by Commercial Director Meenakshi Mallik are among the entities that have put in preliminary bids.

A memorandum for inviting expressions of interest was issued on January 27, 2020, which has since been followed by eleven separate clarifications, many of them postponing the deadlines for submitting bids. The government now expects the process to conclude only in the next fiscal year, after April 1.

An unnamed “senior official” at the airline told the Mint newspaper that the search for a new loan was necessitated by the absence of any infusions of funds from the government.

“The government has stopped infusing funds into the airline, but it will stand as a guarantor for the loans. The latest round of funds raised from the banks will be used to refinance an earlier loan of the same amount,” the official said.

With an improvement in passenger traffic expected to arrive only in 2022, India’s airlines, including Air India, are set to post net losses of around INR210 billion (USD2.88 billion) during the current Covid-afflicted fiscal year, the Indian credit rating agency ICRA Limited said in a report published in December.

“Debt levels will remain high for the industry and are estimated to be [...] around INR500 billion [USD6.86 billion] (excluding lease liabilities) in FY2021 and FY2022, with the industry requiring additional funding of INR350-370 billion [USD4.8-5.1 billion] over FY2021 to FY2023,” the sector report warned.