New Delhi: State-run Air India is likely to be allocated 1,200 crore in the Budget for 2011-12, a little over half of what the civil aviation ministry had sought for the ailing carrier.
"It doesn't look like we are going to get more than 1,200 crore for Air India in the forthcoming Budget. That's what the finance ministry has expressed so far," a senior aviation ministry official said. The civil aviation ministry had asked for 2,000 crore.
Funds will be released in tranches and will be subject to the airline meeting performance milestones set by the finance ministry, the official said.
Air India has accumulated losses of 13,000 crore and debt of 50,000 crore. At a meeting with the Prime Minister's Office in November last year, the airline's independent directors had said that the carrier needed one large injection of funds instead of small doses of equity infusion which may not be effective in helping the airline improve its financial condition.
Earlier in the month, the finance ministry had asked for the airline's turnaround plan when Civil Aviation Minister Vayalar Ravi had requested for infusion of more funds into the national carrier.
The turnaround plan, which is essentially a five-year business plan, has two parts: financial turnaround of the airline using equity infusion from the government, and an operational business plan focusing on fleet size, routes and ways to regain market share. The plan will go to the airline's board for approval on March 15.
28/09/11 Economic Times
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