Funds crunch: Air India may get Rs2,500 crore

Funds crunch: Air India may get Rs2,500 crore

Hyderabad: The government plans to infuse Rs1,000-1,500 crore in state-run carrier Air India to meet its funding requirements, civil aviation minister Praful Patel said on Wednesday.

Air India will also require about Rs1,000 crore in working capital, Patel told reporters in Hyderabad, where he opened a civil aviation air show. “The government is considering offering financial assistance to Air India to make it a viable and strong entity," he said.

The Rs1,000 crore will be a long-term loan that Air India will repay at a reduced interest rate, chairman and managing director Raghu Menon said.

The airline will focus more on international operations over the next one year as wide-body aircraft join its fleet of about 150 planes, Menon said. Possible new routes could include San Francisco in the US, South Africa and Australia.

Ministry mulls airline tax cuts, lower charges

Mumbai: The Union government said it may consider lowering taxes and operating charges to assist airlines hurt by higher fuel costs and record losses.

The government may ask banks to facilitate working capital for carriers and tell state-owned oil companies to delay seeking payment on jet-fuel purchases, civil aviation minister Praful Patel said on Wednesday in Hyderabad.

India is among the world’s most expensive places to buy jet fuel, according to the International Air Transport Association.

“It’s difficult for the government to write a cheque, but we can consider giving other assistance," Patel said. “The government has set up a committee to look into the problems of the industry and find ways and means to restore the financial health of the sector."

India’s carriers have complained to the government that banks are “unhappy" to lend to them, Patel said at an aviation conference.

Banks worldwide have curbed lending because of increased concerns about getting their money back following the collapse of Lehman Brothers Holdings Inc. and the start of a wider economic slowdown.

Higher fuel prices, overcapacity and slowing demand will push the nation’s aviation industry to a record $2 billion (Rs9,680 crore) loss this year, the Centre for Asia Pacific Aviation has forecast. The loss is more than double that of last year.

A kilolitre of jet fuel cost Rs73,600 in Mumbai compared with the equivalent of about Rs46,500 in Singapore, International Air Transport Association, or IATA, had said last month.

National Aviation Co. of India Ltd, which owns Air India, is estimated to have had a loss of about Rs2,000 crore in the year ended 31 March, its chairman Raghu Menon said on 21 August.

The government has further deferred a plan to sell shares in the airline, Patel said.