Nacil’s bailout request runs into trouble

New Delhi: The state-run National Aviation Co. of India Ltd or Nacil’s request for a Rs4,000 crore bailout from the government to help it overcome financial and operational challenges posed by the slowdown in business and an ongoing merger—Nacil was created by merging Air-India and Indian—has run into trouble, said a senior government official, because the company hasn’t provided details of how it plans to spend this money.
India’s airlines, faced with mounting losses and slowing passenger traffic, are lobbying the government for a bailout. The country’s three largest airline firms Nacil, Jet Airways (India) Ltd and Kingfisher Airlines Ltd are scouting for funds. Domestic airlines here reported a fall of around 13% in passenger traffic in October compared with the same month a year ago, and ferried 3.13 million passengers, according to data released Wednesday by the Directorate General of Civil Aviation.
Nacil is looking to raise money from the sale-and-lease-back of aircraft (when it sells planes it owns to a finance firm and leases it back), allowing employees to take extended breaks without pay, and seeking funds from its “owner”, as the airline’s spokesperson terms the government.
Nacil’s new fund requirement is almost equal to the losses it could make by the end of this fiscal year, according to an analyst. It is almost double what it had previously sought.
The civil aviation ministry is processing this request but cannot forward it to the finance ministry without details of how this amount will be spent. “We have asked them to provide us with details of utilization. It’s still not clear (how they plan to use it),” the official said.
Nacil executive director Jitender Bhargava said the company is seeking money from the government “by virtue of its ownership” but declined further details.
13/11/08 Tarun Shukla/Livemint

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Categories: NACIL Nov 2008