Govt: Cash-strapped AI must prune order for new planes

New Delhi: The government is likely to tell the cash-strapped Air India to prune its order for 111 planes that would cost the exchequer about Rs 44,000 crore. This order was placed three years ago when the aviation industry in India was growing at nearly 30% and the economy booming. But, now, in this slowdown, almost all airlines are struggling to remain afloat and AI is seeking a bailout from the government to survive. Nearly 45 of the ordered planes have already joined the Maharaja's fleet.
A highly placed government official said: "The airline has so far not come up with any concrete or credible plan that shows they have a road map to survive, leave alone emerge stronger. There is talk of AI seeking Rs 10-15,000 crore in support, clearing which is out of question. Being the national carrier we will hold its hand and support it." The Maharaja is going to seek soft loans and equity infusion from the government as it is finding it hard to even meet its working capital like paying salaries.
Top official added that given the airline's poor financial health and the fact that aviation industry is unlikely to see any drastic improvement in fortunes in a hurry, AI will be asked to take a relook at its fleet acquisition plan.
21/06/09 Saurabh Sinha/Times of India

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Categories: NACIL Jun 2009