AI to seek Rs 17k cr as one-time bailout

New Delhi: Cash-strapped and debt-ridden Air India has pressed the panic button by informing the government that it needs around R17,000 crore for a proper turnaround of its operations. The airline's chairman and managing director, Arvind Jadhav, is planning to make a strong case for such a one-time bailout and is seeking an opportunity through the civil aviation ministry to make a presentation before Prime Minister Manmohan Singh.
SBI Capital — which has been appointed to prepare the airline's financial restructuring plan — has also proposed an immediate infusion of government equity in the range of R12,000 crore to R17,000 crore. The carrier has already taken up the matter with civil aviation ministry, which is at various stages of discussions with the finance ministry. Official sources told FE that Jadhav has already discussed the matter with the civil aviation minister Vayalar Ravi.
"The turnaround plan for the airline is based on growth strategy. Reducing the size of Air India is a no-go option. We expect the government to help us clear the liability. Both the dues and debts have to be cleared," Jadhav told FE.
Besides the accumulated loss of R19,000 crore as on March 31, 2011 Air India is burdened with a working capital debt of R21,200 crore. The infusion of further equity would help the national carrier to have better negotiations with the bankers for its debt restructuring plan. AI is in talks with many bankers including State Bank of India, Indian Bank, Syndicate Bank for converting a part of its short term loan into equity. The bankers have told the carrier to offer government guarantee to buy back the equity in case of non performance of the company.
16/07/11 Nirbhay Kumar/Parul Chhaparia/Indian Express

To Read the News in full at Source, Click the Headline

Categories: Air India Jul 2011