Air India plans to restructure strategy

Mumbai: The Maharaja of Indian aviation will restructure strategy to end its financial troubles. Air India, the country’s third-largest airline by market share, on Sunday announced its turnaround strategy due for completion by 2014.
According to the plan released on Sunday, the company will aim to achieve a positive balance sheet by 2014-15. The decision was approved following a meeting of the board of directors and employees with the company’s management.
“The focus of the plan is on reducing the cost of debt to the company and replacing high-cost debt with low-cost ones. The government will also infuse equity to the tune of Rs 1,200 crore in the coming months subject to the performance of the company,” said Praful Patel, civil aviation minister.
The carrier will restructure the working capital loan through a mix of bonds guaranteed by the government over the next four years and will infuse additional capital through sale of land or buildings or use them as security for loans, Air India said in a statement on Sunday.
The government has infused Rs 800 crore in the past to revitalise its financial difficulties and the additional infusion will largely depend on the company’s financial performance in the coming months.
Air India currently has a working capital debt of nearly Rs 18,000 crore and the airline had appointed SBI Capital to assess and plan its financial restructuring. The company will consider launching its domestic low-cost carrier in the coming months to take on the existing low-cost carriers that have been absorbing its market share.
26/07/10 Economic Times

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Categories: NACIL Jul 2010