Bottomless pit! After failed privatisation bid, govt may give Air India Rs 2,100 crore
A month after requesting the government to restore its equity infusion, Air India has now raised a fresh requirement of Rs 2,100 crore from the Centre to take care of its immediate operational expenses. This money, however, will not be enough as this fund will only meet the airline's immediate needs. In future, the state-run airline will need larger capital to lease planes to compete with domestic and international carriers.
Last year in March, Air India's board of directors had approved a proposal to induct seven Boeing 787-9 aircraft in its fleet with the aim to improve connectivity to Canada, the US and Australia. The airline was planning to float tenders for procuring these aircraft on lease in June. However, the proposal was put on hold as the government decided to go for privatisation.
According to a report in Mint, the Centre is expected to infuse equity into Air India to fund its operational and working capital requirements. "The government is committed to provide Air India with necessary financial resources for its successful turnaround," Mint quoted an official as saying.
Earlier in June, the national carrier sought proposals for short-term loans worth Rs 1,000 crore to meet urgent working capital requirements. Amid fund crunch, Air India borrowed Rs 6,250 crore from various banks between September last year and January this year for working capital requirements and other needs.
Recently, the state-run airline sought restoration of the equity infusion by the government in the carrier. Air India's equity infusion request came days after the government informed that it had not received any bid for the national carrier's strategic disinvestment. Air India has a debt burden of about Rs 50,000 crore.
In April 2012, the Congress-led UPA government had approved a turnaround plan under which Air India is to receive a total equity infusion worth Rs 30,231 crore up to 2021. So far, the state-run airline has received more than Rs 26,000 crore under the bailout package.
The carrier had been receiving about Rs 3,000-4,000 crore equity infusion on an average per fiscal from the government till 2013-14. However, after that the amount was gradually reduced. For 2018-19, the airline has been allocated Rs 650 crore.
Last month, Minister of State for Civil Aviation Jayant Sinha said that the government was committed to provide financial support to Air India. He said: "The government is committed to provide appropriate liquidity and ensuring all financial arrangements are in place for Air India to continue to maintain its operations at world class levels."