Govt wants AI back in black ahead of its listing by 2013

The government is keen to see national carrier Air India cleaning up its financial mess within two years, so that the public sector carrier can be listed by 2013. Considering the mountain of debt and huge losses burdening the Mahrajah, this is an uphill challenge, but the UPA government feels that Air India should be back in the black at the earliest.
According to discussions spanning the group of ministers (GoM) and the committee of secretaries (CoS) on Air India revival, additional equity infusion by the government would be subject to cleaning up of the carrier’s financial mess within two years. The prime minister is also watching the revival progress, which is being coordinated by the civil aviation ministry and the Air India management, which will be assisted by NM Rothschild and Booz &Company.
The target of listing by 2013 gives Air India three years to wipe off red ink splattered all over its balance sheet. Considering the numerous problems faced by the airline, senior government officials are not willing to go on record, but they insisted that the government cannot provide additional equity to the company without a commitment and roadmap for returning to profits. Air India insiders as well as industry experts feel that the target is tough, but there is no point in providing money to the loss-making airline without a proper revival roadmap with clear milestones. The overwhelming feeling is that the additional equity committed by the government is not enough and the effect will be lost, if the funds flow in small tranches.
As of now, the government has promised Rs 800 crore of additional equity for Air India early next year, with the remaining portion of the promised additional equity of Rs 5,000 crore coming in several installments in three years.
03/12/09 G Ganapathy Subramanaim/Economic Times

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Categories: NACIL Dec 2009