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The Ministry of Civil Aviation has released the first tranche of Rs 800 crore to Air India this financial year as part of the turnaround plan to infuse equity for the revival of the cash-strapped national carrier.
A senior official at the ministry said, “We reviewed the performance of the airline and are satisfied with the feedback we have received. Since the Finance Bill is yet to be passed, as per norms we have released 16% of the budgeted amount to Air India.” The airline was allocated Rs 5,000 crore as equity infusion in the Union Budget this fiscal.
Of the Rs 800 crore released, Rs 500 crore would be utilized by the airline to clear dues of oil companies. The remaining resources would be used for payment of interest on non-convertible debentures (NCDs) issued last year.
The remaining amount of Rs 4200 allocated in the Budget to Air India would be released on a quarterly basis.
Last year the Cabinet had approved a turnaround plan for Air India and sanctioned equity infusion of Rs 30,000 crore over a period of nine years starting 2012-13. The government had also agreed to give a guarantee for the airline’s debt restructuring plan.
Air India’s total debt stands at about Rs 43,000 crore. It also has dues worth hundreds of crores to oil companies, airports and vendors. Last December, the government had said Air India owed Rs 4,064 crore to oil companies. It owes about Rs 1,300 crore to airport operators, the majority of it to the Airports Authority of India.
Owing to non-clearance of dues, Air India doesn’t get concessional rates for fuel. Recently, Air India struck a deal with oil companies to buy aviation fuel at a discount of about seven%. This would help it save Rs 480 crore on fuel consumption annually. However, it is yet to receive fuel at concessional rates.
With the Federal Aviation Administration (FAA) in the United States recently approving the modification of batteries on 50 grounded Dreamliners, the ministry official also said all six Boeing 787s owned by Air India will take to air by the end of May. “The first flight will be operational on May 12. Two more aircrafts would be ready by mid-May. All six aircrafts would be deployed on domestic routes initially”, informed the official.
Air India had originally deployed three Boeing 787s on domestic routes and the remaining three aircrafts on international routes to Dubai, Frankfurt and Paris before the planes were grounded by FAA because of safety concerns.
