Bumpy ride for Air India bailout plan

New Delhi: Cabinet secretary K. M. Chandrasekhar is not fully convinced of the merits of state-run Air India’s bailout proposal, which comprises an equity infusion of Rs 1,231 crore and a soft loan of Rs 2,750 crore.
Prior to reintroducing the proposal before the committee of secretaries, the civil aviation ministry will now have to hold further discussions with other ministries, including finance.
In the meantime, the ailing carrier will have to continue servicing unviable routes, while running up huge loans on aircraft to operate an unwieldy number of flights.
Air India plans to spend around Rs 8,165.44 crore in the next fiscal on aircraft.
Many within the government feel that irrespective of the bailout, the airline should take a hard look at servicing unviable routes.
Air India had sought equity to strengthen its balance sheet and get loans at cheaper rates for expansion.
It plans to buy around 111 aircraft worth about Rs 44,000 crore as it reported a loss of over Rs 2,000 crore in 2007-08. The airline is expected to suffer a larger loss in this fiscal.
The plea for aid comes on the back of similar reliefs given to other airlines and airports.
03/03/09 Jayanta Roy Chowdhury/The Telegraph

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Categories: NACIL Mar 2009