New Delhi: Equity infusion of Rs 4,000 crore into Air India, proposed by Finance Minister Pranab Mukherjee in Union Budget 2012-13, will improve the debt-equity ratio of the airline to a level considered comfortable and help open the doors of banks for them. The infused funds would be used to immediately clear the dues of oil companies, airport operators and employees’ salaries.
The airline’s debt-equity ratio will improve to 1:6.5 from 1:13 now. Industry analysts say a debt equity-ratio of 1:6 is considered comfortable for airlines. The national carrier has a debt of over Rs 43,000 crore and accumulated losses of over Rs 20,000 crore.
The government has, in the Budget, proposed an equity infusion of Rs 4,000 crore into the national carrier during the next financial year, increasing its equity to Rs 7,345 crore. The infusion is over and above the Rs 3,200 crore infused into the airline in the last two financial years.
A top Air India official said the funds would be used to liquidate the outstanding dues. “This infusion is part of the financial restructuring plan and the money infused will be used to liquidate the outstanding dues,” he said.
The carrier will pay Rs 2,500 crore to oil companies, Rs 1,200 crore is due to be paid to airport operators and Rs 580 crore as employees’ salaries.
Another senior Air India official said the next financial year could be a revival year for the beleaguered airline.
18/03/12 Mihir Mishra/Business Standard
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