Close on the heels of the Jet Airways fiasco, state-owned Air India is staring at debt repayments of Rs 9,000 crore in the current fiscal year but sorely lacks the wherewithal to service them, said people with knowledge of the matter. While yet another government bailout could be its sole chance of survival, no decision is likely until the elections are over and the next administration takes over, they said.
The ministry of civil aviation and the airline have escalated the concern to the finance ministry, three government officials told ET.
“Principal payments of a few loans are due this year but the airline does not have money to repay them,” said one of them. “Either Air India defaults or prunes its operations and thus costs to repay these loans. Representations have been made to the finance ministry on the issue.”
Already in poor financial health, Air India has been losing about Rs 6 crore daily on international flights to Europe and the US due to airspace closure by Pakistan in the wake of border tensions. The losses have forced the airline to cancel a few overseas flights.
Another aviation ministry official said that the government had earlier ruled out any further fund infusions.
“The government had taken over Air India’s debt and made it clear that there would not be any more equity funding,” said an aviation ministry official. “The finance ministry is aware of the issue and the government will have to help because it is a government airline.”
19/04/19 Mihir Mishra/Economic Times
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The ministry of civil aviation and the airline have escalated the concern to the finance ministry, three government officials told ET.
“Principal payments of a few loans are due this year but the airline does not have money to repay them,” said one of them. “Either Air India defaults or prunes its operations and thus costs to repay these loans. Representations have been made to the finance ministry on the issue.”
Already in poor financial health, Air India has been losing about Rs 6 crore daily on international flights to Europe and the US due to airspace closure by Pakistan in the wake of border tensions. The losses have forced the airline to cancel a few overseas flights.
Another aviation ministry official said that the government had earlier ruled out any further fund infusions.
“The government had taken over Air India’s debt and made it clear that there would not be any more equity funding,” said an aviation ministry official. “The finance ministry is aware of the issue and the government will have to help because it is a government airline.”
19/04/19 Mihir Mishra/Economic Times
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