Thursday, December 18, 2008

Aviation ministry seeks Rs2,500-crore package to bail out Air India

The civil aviation ministry is reported to have sought a Rs2,500 crore bailout package for the National Aviation Company of India Ltd (NACIL), which runs the ailing national carrier Air India.

The ministry has also sought cabinet nod for infusing additional equity and further working capital loan in NACIL, which had earlier indicated that it may require up to Rs4,081 crore, including debt and equity, to get out of the rut.

The company had, earlier this year, sought Rs1,300 crore in equity and Rs1,000 crore as debt, but later raised it to Rs1,231 crore in equity and Rs2,750 crore in debt last month.

Since then its losses have more than doubled. Air India lost nearly Rs4,000 crore during 2007-08 and, with the high fuel prices, the airline's accumulated losses are expected to double in the current fiscal.

Air traffic growth in the country fell 22 per cent in November to 3.04 million, with most air carriers operating flights at around 60 per cent seat capacity against the break-even occupancy of over 70 per cent.

With a fleet of 150 aircraft, Air India is the country's largest airline by market share and is bound to share almost half the country's total airline losses.

The airline had to pull out service from some of the commercially unviable sectors and rationalise operations in some other sectors to reduce cost.

While it recently cleared dues of about Rs1,000 crore to oil marketing companies, it still owes a whopping Rs739.5 crore to the Airports Authority of India.

The union cabinet, meanwhile, is expected to take up a recommendation by the civil aviation ministry to delay the implementation of the new ground handling policy by six months.

It is as yet unclear what is the increased amount the ministry has now sought for Air India.

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