Civil Aviation Ministry Mulls Rs 11,000 Crore Bailout Package For Air India
The Civil Aviation Ministry is in discussions with the Finance Ministry for a Rs 11,000 crore bailout package for the ailing Air India, sources said.
The discussions come against the backdrop of a failed effort to privatise the loss-making national carrier, which continues to grapple with financial woes.
Sources in the know said that the bailout package that the ministry is working on would be utilised to reduce high-cost working capital loans. The proposal, which is at a preliminary stage of discussions, is to provide an approximately Rs 11,000 crore package to Air India, they added.
Cleaning up the balance sheet of Air India airline will make it attractive for investors as and when the government decides to once again attempt strategic stake sale of the airline. - Sources
A query sent to Civil Aviation Secretary RN Choubey remained unanswered. An Air India spokesperson said that they will not be commenting upon the matter as it comes under the “domain of the Ministry of Civil Aviation.”
The airline is staying afloat on a bailout package extended by the previous UPA regime in 2012. At the end of March 2017, the national carrier had a debt burden of over Rs 48,000 crore.
Last month, the government sought Parliament’s nod for Rs 980 crore in supplementary grants towards equity infusion into the airline.
Due to the financial crunch at the airline, staff salaries have been delayed for five consecutive months.
In the current financial year, the airline has received an equity infusion of Rs 650 crore up to June. TAP and a Financial Restructuring Plan were approved for Air India by the previous UPA regime in 2012.
All government guaranteed loans and interest thereon are being paid by the government by way of equity infusion into the airline.
Under the FRP, high-cost working capital loans have been converted into long term debt carrying lower rates of interest so as to reduce the financial burden on Air India.
“The TAP/ FRP includes budgetary support amounting to Rs 30,231 crore spread over 10 years ie. up to FY 2020-21 and also equity support for the payment of principal/ interest of the non-convertible debentures,” Jayant Sinha, Minister of State for Civil Aviation had informed the Lok Sabha last month.
“Air India has received an equity infusion of Rs 27,195.21 crore till date,” Sinha had said.