More capital for Air India

New Delhi: The government is likely to approve an additional equity infusion of Rs 800 crore into Air India next week.
“We are moving the cabinet (for equity infusion of Rs 800 crore). A note has been circulated. I think by next week the cabinet approval should come,” civil aviation minister Praful Patel said after a meeting of the group of ministers formed for the revival of the cash-strapped airline.
The government, however, wants the airline to take “extraordinary” measures for a financial turnaround.
“These are testing times for the aviation industry, both internationally and domestically, and extraordinary measures need to be taken,” Patel said.
According to the minister, Air India’s target of cutting cost by Rs 2,000 crore within March is unlikely to be met. So far, costs have been reduced by Rs 700-800 crore. More support will come only if the airline is able to meet its target on cost and revenue, said Patel.
The decision on additional support will also take into account the high-cost debt — current and long term — taken by Air India. The government had earlier decided to grant the ailing airline Rs 800 crore this fiscal as equity.
On the demerger of National Aviation Company of India Ltd (Nacil), Patel said, “The issue is not about merger or demerger, the issue is how we can make the entire airline’s operations profitable.”
Nacil was formed in 2007 following the merger of Air India and Indian Airlines. Nacil now operates under a single brand, Air India. It has been suffering losses since its inception. Its losses stood at Rs 2,226 crore in 2007-08 and about Rs 5,500 crore in 2008-09.
03/02/10 The Telegraph

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

Categories: NACIL Feb 2010