Air India turning into a non-performing asset, say banks in report

Three banks and two aircraft leasing firms have served default notices on Air India over the last few weeks, the Business Standard newspaper reported on Monday, raising concerns about the government-owned carrier’s state of finances and credit-worthiness.

San Francisco, United States-based Wells Fargo Trust Services and UAE's state-owned Dubai Aerospace Enterprise (DAE) have sent letters of demand for pending rental payments, the newspaper said, citing sources.

DAE declined to comment on the report. Air India was not immediately available to comment, while Wells Fargo could not be reached outside usual US business hours. Three lenders from a 22-bank consortium have also written to Air India raising concerns that the company is turning into a non-performing asset, Business Standard said.

Last month, India shelved a plan to sell a 76 per cent stake in Air India due to lack of interest from bidders, in the latest setback in its ambitious efforts to rescue the ailing airline.

The government will continue to support the loss-making airline’s financial requirements while it works on alternatives, Junior Civil Aviation Minister Jayant Sinha had said, without giving a specific timeline for a new plan. The government has remained non-committal on infusing cash into the airline after the failed privatisation process, according to the report.

"Wait till the end of August. The government will give us money and then we will pay you. Please do not take any legal action has been the national carrier’Â's response," the newspaper quoted an executive working for one of the lenders as saying.