AI seeks equity, loan support

New Delhi: Air India is bleeding. The national carrier is likely to seek an equity infusion of Rs 1,300 crore, along with a generous dose of loans or grants from government to stay afloat.
Hit by high cost of jet fuel, it is expected to report a loss of over Rs 4,000 crore in the current financial year, doubling the Rs 2,160 crore estimated earlier and accounting for almost half of Rs 9,000 crore estimated loss of the domestic aviation industry. In 2007-08, it had already suffered a loss of Rs 2,144 crore.
This bleak picture was revealed in Mumbai last week when aviation minister Praful Patel and secretary Ashok Chawla reviewed the "progress" of merger of AI and IA. According to highly placed sources, the airline's financial position is in doldrums. "The working capital requirement of Rs 6,500 crore has now shot up to over Rs 10,000 crore. Ideally this requirement should be met from revenues, but all airlines, including AI, are now struggling to meet rising costs with falling revenues," said a source.
What worried the ministry honchos was the fact that the merged AI-IA's load factor is falling, averaging 60% now, compared to industry figure of 68% to 70%. Its market share in domestic skies is about 14% with much higher capacity.
09/07/08 Saurabh Sinha/Times of India

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Categories: NACIL Jul 2008