Air India In Near-Term Financial Distress

New Delhi: Cash-strapped Air India is grappling with what appears to be an inability to pay for fuel and airport usage charges at a time when it is trying to tide over several debts coupled with a huge revenue loss due to a recent strike by its pilots. But India’s government has stepped in to broker a deal to pay the bills.
Airport operator GMR, which has a controlling stake in both Delhi International Airport Ltd. (DIAL) and GMR Hyderabad Rajiv Gandhi International Airport Ltd. (HIAL), gave an ultimatum to Air India last week to pay airport charges for each individual flight if it wanted to carry on flight operations.
A similar notice has also been sent to Kingfisher Airlines, the country’s second-largest private carrier.
GMR’s tough stance comes against the backdrop of nonpayment of airport fees by Air India and Kingfisher since October and December, respectively.
“The managements of both these airports have had to take this decision after continued consultations with these companies failed to yield payments of outstanding dues,” GMR says. “It is expected that the two airlines will clear major outstanding payments owed by the airlines to the Delhi and Hyderabad airports.”
While state-run Air India owes 2.17 billion rupees ($48 million) to New Delhi’s Indira Gandhi International Airport and 358.9 million rupees ($8 million) to Hyderabad’s Rajiv Gandhi International Airport, Kingfisher owes 679.8 million rupees ($15 million) to Delhi’s airport and 219.8 million rupees ($5 million) to Hyderabad’s airport.
01/06/11 Jay Menon/Aviation Week

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Categories: Air India Jun 2011