The proposal for the current financial year will be discussed by GoM tomorrow.
A group of officers, set up by the government to vet Air India’s restructuring plan, has recommended a Rs 6,000-crore bailout for the current fiscal. Most of this money will come through equity infusion; the rest would be in terms of guarantee for loans.
The recommendations of this group, comprising officials from the ministries of finance and civil aviation, will now go to the Group of Ministers on Air India which will meet on Thursday.
| SEEKING HELP * A large component of Rs 6,000 crore will be through equity infusion. The airline has already got Rs 1,200 crore from the govt * The panel has sought an infusion of over Rs 24,000 crore till 2021 * All these infusions carry strict riders like cost-cutting through rationalisation of wages and increasing revenue attached with them * Air India, in its financial turnaround plan, has demanded an equity infusion of Rs 43,000 crore till 2021 |
A senior civil aviation ministry official said on Tuesday that the group of officers has recommended a Rs 6,000-crore infusion in Air India for the ongoing 2011-12. “The maximum part of the money will be equity infusion. Of the recommended infusion, the airline has already got Rs 1,200 crore from the government,” he told Business Standard.
All these infusions have strict riders attached with them, the official said. That includes cutting cost through rationalisation of wages, increasing revenue and utilisation of assets. “The group has sought an infusion over Rs 24,000 crore to be done till 2021,” he added.
All the recommendations will be discussed by the Group of Ministers, headed by Finance Minister Pranab Mukherjee, which is meeting on Thursday.
Mumbai-headquartered Air India, in its financial turnaround plan, has demanded an equity infusion of Rs 43,000 crore till 2021. For the current year, it wants infusion of Rs 8,373 crore, an upfront equity infusion of Rs 6,600 crore and support of Rs 1,772 crore in the form of a guarantee on short-term loans for this financial year.
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The committee of ministers had formed a sub-committee to vet the proposal. The sub-committee got some revision like projections based on modest numbers and minor cut in the number of aircraft to be inducted in the turnaround plan.
The fund requirements of the cash-strapped airline are huge. It has to repay Rs 20,415 crore worth of loans before the end of this financial year. AI has Rs 42,350 crore of debts in all — Rs 20,185 crore aircraft loans, Rs 22,165 crore working capital loans and the others being overdue.
The 1932-founded carrier with accumulated losses of Rs 20,000 crore since 2007 also has an overdue pegged at Rs 4,489 crore — Rs 2,600 crore to oil marketing companies, Rs 800 crore to airport operators and Rs 400 crore to other vendors.
The GoM will also decide the fate of 27 Boeing 787 Dreamliners that Air India ordered in 2005. The view is that the debt-ridden carrier does not have money and cannot afford to buy the aircraft. The deliveries of these aircraft are already delayed by over three years.
However, the airline feels that the medium-haul 787s will be a game changer. This next-generation aircraft that consumes 20 per cent less fuel will be make their medium haul routes profitable.
The aircraft will replace all the Boeing 777s (currently deployed in medium-haul routes), which will deployed in long-haul international routes, and Airbus 319s and 321s that will be deployed in the domestic routes.