Government weighing bailout package for all domestic airlines
18 February 2012
The government has asked all Indian scheduled airlines to submit details of their financial position, debt position and working capital requirements so that a bailout plan could be worked out.
The move, which is in consultation with banks and the finance ministry, comes close on the heels of a group of lenders approving a bail-out plan for state carrier Air India.
A working group headed by the civil aviation secretary is reported to have has asked CMDs of the seven Indian scheduled airlines to submit details before the month-end.
Domestic airlines, including Air India and Kingfisher Airlines, have been knocking at government's doors seeking help to tame the volatile rupee and rein in rising aviation turbine fuel prices, in order to escape the debt trap and find a sustainable business model.
Fuel credit has been one of the main worries of airlines and, in fact, Air India and Kingfisher Airlines were getting fuel on a pay-and-carry basis ever since they defaulted on payments to oil retailers.
Against assured fuel supplies for 100 days on a bank guarantee of Rs800 crore earlier, banks are unable to ensure fuel supplies for just 50 days with a Rs800 bank guarantee at present.