New Delhi: Beleaguered national carrier Air India is unlikely to get more than Rs800 crore in government bailout money in the current fiscal ending 31 March, two officials said.
A group of ministers had decided in November to infuse capital in the airline in tranches of Rs400 crore based on monthly reviews of its cost-cutting measures. The state-owned firm was, therefore, expecting Rs2,000 crore from the government this fiscal.
Budget hurdle: A June photo of civil aviation minister Praful Patel with Air India chairman and managing director Arvind Jadhav (standing behind him) and ministry officials. Patel said in November the final call on government support for the airline will be taken at the end of March. Harikrishna Katragadda/Mint
The government has approved giving Air India Rs800 crore after reviewing its performance for November and December, and a final clearance from the finance ministry is expected by the end of January.
The carrier is not likely to receive any more funds till the Union government presents its budget for 2010-11, said the two officials, both of whom spoke on condition of anonymity.
The money will largely go towards paying off loans taken to purchase aircraft, one of the officials said.
Air India inducted 29 new aircraft in 2009, part of a 2005 aircraft order to Boeing Co. and Airbus SAS for $11 billion (around Rs50,000 crore). In 2010, the carrier plans to add half a dozen aircraft to its fleet.
India’s flag carrier has been battling strong headwinds in recent years and posted a loss of Rs5,548 crore in 2008-09. It has outstanding debt of as much as Rs16,000 crore and a monthly cash deficit of Rs400 crore.
The airline has an equity base of Rs145 crore and has been requesting a cash infusion since last year.
The government would be “able to finally take a call at the end of March as to what will be the final support which the government will provide,” civil aviation minister Praful Patel had said in November.
Meanwhile, Air India has also cleared a proposal to pay €5 million (Rs32.5 crore) to Star Alliance.
It was expected to join the global grouping of airlines by June but has postponed it till December, an executive at the firm said. He too declined to be named.
Despite the postponement, the airline has to make this payment to keep its membership request alive. Joining the alliance will enable Air India to offer in a single ticket seamless connectivity to places where any of the group’s airlines operates flights.