Hard bargain on AI equity in air

New Delhi: The amount of equity the government will infuse into beleaguered Air India will depend on the compromise formula the finance ministry and the ministry of civil aviation work out.
The aviation ministry wants an immediate equity infusion of Rs 2,000 crore and subsequent cash injections to take the total amount to Rs 5,000 crore.
However, the finance ministry is ready to allow Rs 1,350 crore as equity infusion and is unlikely to agree to nearly a four-fold increase, sources said. It may, however, agree to a compromise increase in funding for Air India, whose current paid-up capital is Rs 145 crore.
Air India, which has accumulated losses of Rs 7,200 crore, is also seeking a government guarantee to retire high-cost borrowings that make up Rs 11,000 crore of its Rs 16,000-crore debt portfolio and replace them with cheaper credit. Banks have sought sovereign guarantee to cut interest rates.
Officials said the plea to grant the guarantee was likely to go through.
In August, the national carrier had unveiled plans to turn around in 24-36 months by shifting more flights to a low-cost carrier model; spinning off cargo, ground handling and engineering units into separate firms or joint ventures; and restructuring its debts.
18/09/09 Jayanta Roy Chowdhury/The Telegraph

To Read the News in full at Source, Click the Headline

Categories: NACIL Sep 2009