Riders likely to Air India bailout

New Delhi: The Rs 2,350 crore bailout package for the ailing Nacil may come with some strings attached.
Nacil, formed after the merger of erstwhile Indian Airlines and Air India, has approached the ministry of civil aviation with a proposal for equity infusion to the tune of Rs 1,350 crore and another Rs 1,000 crore as a soft loan.
While this proposal has been talked about for some time now, with civil aviation minister Praful Patel even taking up the matter with Prime Minister Manmohan Singh, it is for the first time that a conditional grant is being talked about.
Highly placed sources said today that given Nacil’s less than satisfactory performance, a bailout package based on operational efficiency cannot be ruled out.
“..even if the ministry of civil aviation doesn’t impose any conditions for the package, the cabinet or finance ministry may,” sources said.
Then, a bailout would not only help the national carrier get back on its feet, it could also hasten the completion of the merger which was announced last year.
Nacil has an equity base of just Rs 145 crore when it is buying aircraft worth Rs 44,000 crore and needs to raise “substantial” funds for the purpose. The ministry feels that it would be difficult for Nacil to raise funds on its own, without Government support in the form of equity infusion and loan.
17/09/08 Sindhu Bhattacharya/Daily News & Analysis

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Categories: NACIL Sep 2008