Govt for fresh equity in A-I, IA

The government is planning to infuse more equity into sate-owned carriers Indian Airlines and Air-India soon.

The move, according to an official, will come in handy when the two airlines get the final nod from the government to acquire additional aircraft.

Indian Airlines and Air-India will require nearly Rs 20,000 crore to finance their long-pending fleet acquisition plans.

The bulk of the funds will be raised from international consortiums as loans.

According to officials, the government is of the view that the two carriers will require an enhanced equity base to attract international lenders.

"Both airlines will require an enhanced equity base to get the kind of loans they need to fund the expansion. With their current equity base, many international lenders will not be ready to provide the funds the two companies will require," said an official.

The additional equity will come from the Rs 14,000 crore support provided by the Budget in the form of equity and loans to public sector enterprises.

While Air-India's total paid-up capital is Rs 153.84 crore, Indian Airlines has a paid-up capital of Rs 105.19 crore.

Indian Airlines was given Rs 320 crore in the 2003-04 Budget to enhance its equity and fund its Rs 10,000 crore aircraft acquisition plan. The government is likely to provide more than Rs 320 crore in this fiscal.

"Indian Airlines will be using the Rs 320 crore support at the time of fleet acquisition. But the government is of the view that it will require a larger support than this," said the source.

Air-India is engaged in an exercise to evaluate its requirements for the induction of long-range and short-range aircraft till 2007-08.

Apart from this, it also wants to embark on a second phase of fleet acquisition to support operations for its planned non-stop operations to the US and Europe.