National flag carrier Air India Ltd intends to borrow money overseas to refinance some of its working capital loans, two company executives said.

The cash-strapped firm is the first Indian carrier to do so after finance minister Pranab Mukherjee in the national budget presented in Parliament in March allowed local airlines to raise working capital through external commercial borrowings (ECBs) only in the current financial year.

The move was aimed at tackling a crisis in the country’s aviation industry, with domestic airlines laden with a combined debt of of $20 billion, according to a report in Mint.

“We are further planning to bring down our debt by refinancing some of our working capital loans.” one of the executives said. “Though the cap for the entire sector is fixed at $1 billion, Air India is expected to get the maximum, considering our books.” 

Air India has invited applications in this regard from domestic banks and international financial institutions, which will enable the carrier to pare its interest servicing cost of working capital loans by nearly 50%, the officials said, requesting anonymity.

“The last date for applications for banks is on 4 May and we would be able to refinance some of working capital loans by June,” said the first official.

Other airlines such as Jet Airways (India) Ltd, Kingfisher Airlines Ltd and SpiceJet Ltd are considering similar efforts, but none have yet announced any specific plan.