Air India seeks Rs5,000 crore more in government aid

The new board of Air India, which met prime minister  Manmohan Singh and finance minister Pranab Mukherjee on Wednesday, is reported to have sought up to Rs5,000 crore financial help from the government in the form of equity to turn around the ailing national carrier.

The board is reported to have sought an equity infusion of Rs5,000 crore to take care of one-time moratorium on loan repayment costs as also a zero coupon sovereign guarantee to bring down loan repayment costs.

The board members and senior officials of Air India earlier, on Tuesday, met the prime minister to apprise him of AI's financial health, sources said.

The new board members include Anand Mahindra, Amit Mitra, Harsh Neotia and Fali Major among others.

The audit committee of Air India had, earlier, proposed a complete overhaul of the airline's unsecured debt, as well as debt taken to fund a major aircraft acquisition plan of about $10 billion. Of this, $7 billion has been underwritten by the Government of India.

Air India is paying about 11.5 per cent on its unsecured loans. The audit committee wants this outgo be brought down to the lowest possible level.

According to sources, the board has also set a target of cutting down expenditure by nearly Rs2,000 crore annually.

The airline is also planning to improve its load factor and stop flying on loss-making routes and improve on-time performance.