Government approves Rs 800 cr equity infusion into Air India

New Delhi: The government has approved Rs 800 crore equity infusion into cash-strapped Air India on Thursday, but wants the airline to take "extraordinary" measures to achieve a financial turnaround.
While the government had earlier approved equity infusion of Rs 800 crore in Air India, the Group of Ministers (GoM) headed by Finance Minister Pranab Mukherjee, which met earlier this month, has not taken any final decision on the issue of another tranche of equity of Rs 1,200 crore. The GoM is expected to meet again over the next couple of weeks.
The sources said Air India was unlikely to meet its own target of cost-reduction by Rs 2,000 crore by this fiscal. The costs have been cut by about Rs 700-800 crore so far and "extraordinary measures" are required to save more, they said.
Any further assistance would only be given on achievement of specific revenue enhancement and cost-reduction targets by the airline, the sources added.
The airline has been incurring heavy losses for the past few years -- Rs 2,226 crore loss in 2007-08 and about Rs 5,500 crore loss in 2008-09.
18/02/10 Agencies/Economic Times

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Categories: NACIL Feb 2010