Rs 2.5k cr package for Air India likely by Jan

New Delhi: The civil aviation ministry has moved a draft Cabinet note proposing a bailout package worth Rs 2,500 crore for National Aviation Company of India (NACIL), which runs Air India. The final package is likely to be put in place by January after views of all ministries concerned are taken into account.
NACIL has been asking the government to provide financial help to meet its working capital requirement and expansion plans. The company had to bear an additional burden of Rs 2,310 crore on account of high jet fuel price during April to October.
“We have moved the Cabinet for providing soft loan and equity infusion to Air India. By January is should be finalised,” a top ministry official said, without quantifying the financial package.
The domestic aviation sector has been bleeding on account of high jet fuel prices and is one of the worst affected sectors from the downturn in the economy. It lost nearly Rs 4,000 crore during 2007-08 and the accumulated loss is expected to double in the current fiscal.
Air traffic growth during November fell 22% to 3.04 million. Most of the air carriers operated flights with nearly 40% seats empty. As per industry estimate, airlines break-even at over 70% occupancy of the aircraft.
Air India, the country’s largest airline by market share, operates about 150 aircraft in the domestic and international market.
18/12/08 Economic Times

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Categories: NACIL Dec 2008