Mumbai: The Cabinet Committee on Economic Affairs (CCEA) on Thursday approved a further equity infusion to the tune of Rs 1,200 crore in ailing national flag carrier Air India Ltd.
The airline has already got Rs 2,000 crore as part of the ongoing rescue plan in last two years. Air India had debt of Rs 42,570 crore on its books and accumulated losses of Rs 22,000 crore as on 31 March. Besides, government has also approved and released a sum of Rs 500 crore as equity investment in Air India during the current financial year.
“As Air India is passing through critical financial crunch, the equity induction would not only ease the cash flow situation of the company but would also preclude borrowings from the markets at high costs,” CCEA said in a statement.
Air India’s present paid up equity capital is not sufficient for an aviation company of its size. The company is currently struggling to address costly legacy assets, a weakening revenue stream and high cost structure resulting in rising liabilities, it added.
The airline is now demanding Rs 6,600 crore as an upfront payment for immediate relief. According to the latest plan submitted to the government, Air India is seeking a total equity support of Rs 42,920 crore till fiscal 2021. That’s including guarantees for aircraft loans worth Rs 30,584 crore (both present and future) up to the 2021 fiscal year.