Govt to tell FM, banks to ease airlines' credit woes

The government is looking to convince the finance ministry and banks to lend money to the beleaguered, cash-strapped Indian airlines industry, said Praful Patel, the Union minister for civil aviation.
Even though the government is unlikely to respond to private carriers' cries for a bailout package, it is working on a plan to lower fees and taxes on costs such as ground-handling and landing charges temporarily to ease pressures on airlines, the minister said.
Recently, private carriers had approached the government for a $1-billion bailout package. At the India Aviation 2008 in Hyderabad, Patel said, "It is very difficult in our political system to write a cheque. But I will be meeting the finance minister and various banks and asking them not to put undue pressure on airlines (by not lending). Aviation is a vital infrastructure sector that needs funding."
Airlines, over the past few months, have been complaining that banks have reduced exposure to the sector. They haven't been supporting carriers' working capital and funding requirements due to their bleeding balance sheets.
Industry tracker Centre for Asia Pacific Aviation (CAPA) estimates that there is a need to inject $1.2 billion into the three full-service carriers - Air India, Jet Airways and Kingfisher Airlines - in the next 18 months.
Kapil Kaul, chief executive officer, CAPA, said, "The money will have to come in tranches because expecting anyone to give $1.2 billion now is impossible. Airlines need to have a good story to get the financing through. Under the current circumstances, where the global financial system is going through a crisis, it is very challenging to raise funds."
16/10/08 Nirmal John/DNA MONEY/Sify

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Categories: Indian Aviation- In General Oct 2008