Mumbai/Bangalore: Cochin International Airport Ltd (Cial) is close to settling a four-year-old dispute with Air India over dues worth about Rs30 crore.
The state-owned National Aviation Co. of India Ltd (Nacil), which runs Air India, has paid at least 50% of the dues and is likely to settle the balance by end-December, two Cial executives said.
Air India had won a 10-year contract from Cial in 1999 for ground handling services. As per the original contract, it was to pay Cial a percentage of the Rs60,000 per flight it would charge private airlines. But Air India later argued that it could not be charged on that basis as private airlines paid only Rs30,000-35,000 per flight.
“There were compromises from both the sides and a final settlement is expected soon,” said C.G. Krishnadas Nair, managing director, Cial.
A senior Air India executive said the airline had started paying the dues as its cash flows had become stronger after a lull. He did not want to be identified.
A settlement without litigation assumes significance for Cial as it shows profit inclusive of the dues. Its profit would be seriously hurt if it can’t recover the money from Nacil. Cial’s profit for 2008-09 had improved 27% to Rs59.34 crore on a 25% rise in revenue to Rs173.05 crore.
Another Cial executive said the settlement could involve Air India paying part of the dues immediately and the balance in instalments. “Nothing has been finalised,” he said.
Air India’s settlement proposal comes at time when the ailing carrier is awaiting a soft loan and equity infusion from the Centre. Air India had a Rs5,548 crore loss in 2008-09 and is expecting to lose another Rs5,000 crore in the current fiscal.
Its contract with Cial ends this month and it is not clear if it could get an extension.