Air India may get Rs2,500-crore bailout
17 July 2009
Reeling under a loss of over Rs4,000 crore, India's national carrier Air India may get Rs2,500 crore bailout from the central government, said civil aviation minister Praful Patel yesterday
Citing an interview by civil aviation minister Praful Patel in Delhi yesterday, Bloomberg reported said that the cash-strapped airline may receive Rs2,500 crore in additional capital through soft loans, which could be repaid when the Air India goes public in the near future.
The government-owned National Aviation Company of India Ltd (NACIL), the owner of Air India, faced with losses that are mounting by the day, had asked the Indian government for a Rs14,000-crore bailout package last month. (See: NACIL seeks Rs14,000 crore bailout, but may get much less)
NACIL had asked for a package comprising Rs5,000 crore of equity infusion, Rs2,000 crore of grant and a soft loan of Rs7,000 crore-just to stay afloat.
Patel had promised last month that the government would provide a bailout package for the troubled airline. However, the amount would be much lower than the Rs14,000-15,000 crore sought by NACIL.
The minister said yesterday that since Air India's equity base is very low, the government would like to infuse equity, which could be returned when the airline goes public with an initial public offering (IPO) after the market condition and the airline's financial health improves.