Government clears Rs800-crore equity infusion in Air India
18 February 2010
The government today cleared a Rs800-crore equity infusion into National Aviation Company of India Limited (NACIL), the holding company of beleaguered national flag carrier Air India.
The assistance, however, is conditional to the airline taking "extraordinary" measures to achieve a financial turnaround.
The government today said the Rs800-crore equity would be infused in two equal monthly installments, adding that the release of funds will be calibrated to the achievement of milestones laid down by the group of ministers (GoM).
The equity infusion had earlier been approved by the GoM headed by finance minister Pranab Mukherjee.
Air India's present paid-up equity capital of Rs145 crore is not regardeded as sufficient for an aviation company of its size. The equity induction will not only ease the cash flow situation but also preclude borrowing from the markets at a high cost.
"The equity infusion had been approved by the group of ministers headed by the finance minister. The release of funds will be calibrated to achieving the milestones laid down by the ministerial group," an official release said.
Under the government's directive NACIL is reported to have initiated a multi-pronged turnaround plan which among others envisaged rationalisation of manpower and productivity linked incentive, integration process of erstwhile Indian Airlines and Air India, review of all agreements on technical and operational matters, return of leased aircraft at the earliest, redeployment of staff to curb infructuous expenditure and closure of all overseas offices where NACIL does not operate.