Air India to seek discounts, time to repay its dues

Mumbai: State-owned Air India will seek discounts from three state-owned oil marketing companies on jet fuel sales at par with private airlines and ask for a few more days to settle dues.
The companies had threatened to halt aviation turbine fuel (ATF, commonly known as jet fuel) sale on credit beginning 23 February if the airline failed to clear dues of almost Rs2,000 crore before Monday evening.
“Private carriers such as Jet Airways (India) Ltd and Kingfisher Airlines Ltd are getting an average discount of between Rs3,000 and Rs4,000 per kilolitre of aviation turbine fuel since they have lower credit period and bank guarantees to support the purchase,” said a senior Air India executive, who did not want to be identified. “We had already asked for extended credit period from three months to six months, which they (oil marketeers) turned down. But we are eligible for discounts at par with private airlines. The market is extremely competitive now with private companies selling jet fuel.”
Air India’s annual fuel bill ranges between Rs3,500 crore and Rs4,000 crore.
Faced with threats from oil marketing firms that they would stop supplies to the carrier, the Union government on Saturday threw a Rs1,000 crore lifeline to the airline run by National Aviation Co. of India Ltd to settle fuel bills.
The ministry of civil aviation agreed to extend Air India’s working capital limit by Rs1,000 crore at a Saturday board meeting to tide over the immediate crisis, a ministry official told Mint.
21/02/10 P.R. Sanjai/Live Mint

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Categories: NACIL Feb 2010