Air India has revised the projections and targets for its turnaround plan, to be presented to the Group of Ministers (GoM) monitoring its ailing state.
The next GoM meeting is expected to decide on moving the Cabinet Committee on Economic Affairs soon, for additional equity infusion in the government-owned airline.
The carrier, with a fleet of 133 planes, proposes now to induct not 245, but 240 aircraft in the period till 2014-15. The induction will be a mix of long-haul, short-haul and smaller planes.
“Air India has also reduced the load factor projections for the period to 71 per cent from 75 per cent earlier. This figure seems more realistic, as the airline is clocking a load factor in the mid-60s,” said a government official, who did not want to be identified. He said the revision was made considering the current high oil price.
The airline is demanding an equity infusion of Rs 43,000 crore till 2021. For the current financial 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. Of this, the government had already announced Rs 1,200 crore in the year’s Budget. It also owes the airline another Rs 1,000 crore on operation of VIP flights.
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.
In a communication to Prime Minister’s Office and the finance ministry a few days earlier, the AI management pegged the overdue amount at Rs 4,489 crore.
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The dues include Rs 2,300 crore to oil marketing companies, around Rs 800 crore to airport operators and Rs 400 crore to other vendors, among others. Prime Minister Manmohan Singh, in his recent interaction with media editors, said he’d asked the finance minister to expedite the financial restructuring.
AI has Rs 46,950 crore of debts in all — Rs 20,185 crore aircraft loans, Rs 22,165 crore working capital loans, and the others being overdues.
The accumulated loss has also crossed Rs 20,000 crore, with the airline losing Rs 2,226 crore in 2007-08, Rs 7,189 crore in 2008-09, Rs 5,551 crore in 2009-10 and Rs 6,000 crore in 2010-11.
As part of its turnaround and financial restructuring plans, the airline proposes to issue redeemable preference shares for Rs 7,400 crore of the Rs 22,165 crore working capital loans, with eight per cent dividend. It also proposes steps to enable it to repay Rs 11,100 crore of loans at 11 per cent interest over a 15-year period.