The board of directors of the country’s national carrier - Air India has approved issue of preference shares worth Rs 7,500 crore in favour of a consortium of banks who are providing the embattled airline working capital, as part of the approved debt restructuring plan. Financial Chronicle had reported on November 14 that RBI has approved Air India’s Rs 44,000 crore debt restructuring plan, including issue of preferential shares worth Rs 7,000 crore to a consortium of 14 banks (private and public sector banks).

“The board approved the rearrangement of authorized share capital by issue of preference shares worth Rs 7,500 crore which are proposed to be allotted to the lenders of the working capital as part of the financial restructuring plan,” the company said in statement after a board meeting in New Delhi on Thursday.

A cabinet note is being moved by the ministry of civil aviation for the purpose of equity infusion in Air India and for approving the financial restructuring plan. SBI Capital Markets, the investment-banking arm of the State Bank of India is in charge of working out the restructuring package.

The national carrier is expected to get equity infusion of Rs 3,200 crore from the government by the end of this financial year. So far the airline has received over Rs 1,200 crore in additional equity. Air India has sought an equity infusion of Rs 6,600 crore from the government, so as to bring the debt to equity ratio within acceptable levels.

The airline’s working capital loans are around Rs 20,000 crore while fleet acquisition loans are another Rs 22,000 crore. It also has dues to various vendors of around Rs 4,600 crore and accumulated losses of Rs 20,520 crore.

The board also approved appointment of Vinod Asthana as managing director of Hotel Corporation of India, the wholly owned subsidiary of Air India on Thursday.

The airline’s turnaround plans seem to be making progress with an improvement in passenger revenue, number of passengers carried and yields in the month of November 2011 as compared to the same month in the previous year.

Air India’s passenger revenue went up by 12.3 per cent, number of passengers carried increased by 7.7 per cent and yields were up by 10 per cent year on year, in November 2011.

Air India had load factor of 74.9 per cent on domestic services and 64.1 per cent on international routes, the communiqué said.