The Group of Ministers (GoM) on rescuing government-owned Air India on Friday recommended a plan to infuse equity of Rs 23,000 crore into the ailing airline by 2020-21. The infusion will be with a condition that the carrier increases occupancy in its flights to 73 per cent by 2015 and 75 per cent by 2020. The current occupancy is 69.5 per cent.
The GoM did not decide on the other issue, of Boeing 787 Dreamliner aircraft buys, referring this to the full Union cabinet.
A proposal to infuse Rs 6,500 crore (including Rs 1,200 crore already given) in the current financial year is to be sent to the cabinet. Such an infusion would raise the airline’s equity base to Rs 7,445 crore, from the current Rs 2,145 crore. The Rs 23,000 crore figure suggested by the GoM includes this Rs 6,500 crore; at the commencement of this financial year, the airline’s equity base was Rs 945 crore.
“The group of officers had recommended seven scenarios and the GoM recommended the one with equity infusion of Rs 23,000 crore because that will have least burden on the government,” said an official present at the meeting. He said the airline would have to talk to the Reserve Bank of India on provisioning norms for restructuring of money owed to banks.
AI’S NEED
In its turnaround plan, Air India demanded an equity infusion of Rs 43,000 crore till 2021. For the current year, it wanted 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.
The committee of ministers had formed a sub-committee to vet the proposal. The sub-panel got some revision in the projections and presented seven scenarios to the GoM.
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 debt in all — Rs 20,185 crore aircraft loans, Rs 22,165 crore working capital loans and the others being overdue. With accumulated losses of Rs 20,000 crore since 2007, it 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 did not decide on the Boeing 787 Dreamliners and referred the matter to the cabinet with an option. “Either the airline takes delivery of 14 aircraft and any decision on further deliveries be left for the future or it takes the delivery on sale and lease-back,” said an official.
AI had ordered 27 Dreamliners in 2005. The deliveries, after much delay, are to start from this December.
