Fund crunch hurts Air India operations

Cash-strapped Air India Ltd has been forced to ground four planes with vendors of spares partially stopping the supply of parts as they have not been paid. The national carrier is also facing a threat to operations in at least three airports—Kozhikode, Ahmedabad and Guwahati—because of money it owes jet fuel suppliers.
To add to its woes, airport operators and caterers have threatened to stop services to the airline.
The programme to unify the flight code and ticketing systems of both Air India and Indian Airlines has been held up because of the shortage of funds.
Air India and Indian Airlines merged into Air India Ltd in 2007.
According to two senior executives of the airline, the cash crunch has become so acute that the carrier may not be in a position to pay salaries to its 33,000 employees in the next fiscal year.
The cabinet is meeting on Thursday to decide on a Rs.1,200 crore equity infusion to keep Air India flying. This is despite the airline not having achieved some key targets set by the group of ministers constituted by Prime Minister Manmohan Singh to qualify for the fund disbursement.
16/12/10 P.R. Sanjai/Live Mint

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Categories: Air India Dec 2010