With no buyers in sight, Centre mulling Rs11,000 cr bailout for Air India
08 August 2018
The Civil Aviation Ministry is in discussions with the Finance Ministry for a Rs11,000-crore bailout package for Air India, according to a Press Trust of India report citing sources.
Efforts to privatise the perennially loss-making national carrier have come to nothing so far, as the government is unwilling to cede majority control to potential private buyers.
According to the PTI report, sources in the know said that the bailout package that the ministry is working on would be used to reduce high-cost working capital loans. The proposal is at a preliminary stage of discussions, they added.
“Cleaning up the balance sheet of Air India airline will make it attractive for investors as and when the government decides to once again attempt strategic stake sale of the airline,” one of the sources said.
A query sent to Civil Aviation Secretary R N Choubey remained unanswered. An Air India spokesperson said that they will not be commenting upon the matter as it comes under the “domain of the Ministry of Civil Aviation”.
The airline is staying afloat on a bailout package extended by the previous United Progressive Alliance government in 2012. At the end of March 2017, the national carrier had a debt of over Rs48,000 crore.
Last month, the government sought Parliament’s nod for Rs980 crore in supplementary grants towards equity infusion into the airline.
Due to the financial crunch at the airline, staff salaries have been delayed for five consecutive months.
In the current financial year, the airline has received an equity infusion of Rs650 crore up to June. A turnaround plan and a financial restructuring plan were approved for Air India by the UPA government in 2012.
Under the FRP, high-cost working capital loans have been converted into long term debt carrying lower rates of interest so as to reduce the financial burden on Air India.
“The TAP/ FRP includes budgetary support amounting to Rs30,231 crore spread over 10 years ie. up to FY 2020-21 and also equity support for the payment of principal/ interest of the non-convertible debentures,” Jayant Sinha, Minister of State for Civil Aviation, had informed the Lok Sabha last month.