AI may need `3,000 cr annually for 10 years

New Delhi: Cash-strapped Air India Ltd may need state support of about `3,000 crore every year for the next 10 years just to stay afloat, even as a group of ministers met last week raising concerns on the state of the airline and referring its third turnaround plan in as many years to a committee of secretaries for scrutiny.
The government has so far committed equity support of `3,200 crore to its paltry equity base of `145 crore on which Air India bought a $11 billion (`49,390 crore) worth of 111 aircraft order in 2006.
This was followed by a much-criticized merger of the domestic unit (Indian Airlines) and the international arm (Air India) into a single brand at a time when India was liberalizing international flying rights.
The carrier has over `40,000 crore in debt and has been defaulting on payments to employees, oil companies and other vendors. It is seeking more funds to repay debt amidst accumulated losses.
“There is no privatization, no joint venture, no stake sale (in the works),” said a top government official about the road ahead for the flag carrier, asking not to be identified. “The government decision is to back it up fully. It will require about `3,000 crore in various ways annually for the next 10 years.”
It is not clear in what form this would be granted and what would be the ratio of equity and sovereign guarantee.
A second government official confirmed the move but said the figure “will vary year to year”, and that the entire annual break-up for 10 years has been given to the ministerial group. He, too, declined to be named.
27/06/11 Tarun Shukla/Live Mint

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Categories: Air India Jun 2011