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Business News/ Companies / News/  Air India gets Rs927 crore from the government

New Delhi: The government has infused another Rs927 crore into state-run Air India Ltd this month as part of a fund infusion agreed upon almost a decade ago, and which it has promised to continue even as it works towards selling part of its stake in the airline.

The infusion is timely because the airline has been facing a cash crunch and, in fact, delayed salaries for some employees. Many state-owned banks have also become cautious about lending to the airline, given the move to privatise it. Mint learns that the airline has asked its parent ministry (the ministry of civil aviation) to speak to the finance ministry on this count.

“This will help with liquidity," an Air India official who asked not to be named said, referring to the infusion. Of the Rs2,587 crore the airline was to get from the government this financial year, it has already been paid a total of Rs1,633 crore.

Since 2012, it has received about Rs25,000 crore as equity from the government.

Air India has a monthly shortfall of about Rs400 crore and banks had become jittery about lending to it after the government announced plans to privatise the airline in June, said a government official who did not wish to be named.

The aviation ministry told Parliament this month that it would continue to support Air India as per the approved turnaround plan and would honour financial obligations till further directions.

It also noted that the Cabinet Committee on Economic Affairs (CCEA), in its meeting held on 28 June, had given an in-principle approval for considering strategic disinvestment of Air India and its five subsidiaries and also approved the appointment of advisors for this.

On Sunday, Union minister Nitin Gadkari, who is part of the group of ministers, said profit-making subsidiaries of Air India should be kept out of the proposed privatisation, PTI reported from Nagpur.

“I would urge the aviation minister that the subsidiary running the MRO (maintenance, repair and overhaul) is kept different from its parent, because if a decision on Air India (stake sale) is taken, I hope this company also doesn’t go to some other party. Any business that is profitable should be encouraged by the government," Gadkari said.

Last year, Prime Minister Narendra Modi had lauded Air India in his Independence Day speech, the first such mention of the national airline by a prime minister in recent years.

“Brothers and sisters, in our country, the PSUs (public sector units) are formed to fall into a pit, to fail, to get locked up or to be sold out. That has been the history. We have tried to bring in a new culture. And today for the first time, I can say with satisfaction that Air India, which had a bad image, has succeeded in registering an operational profit last year," he said.

In June, the government surprised everyone with its decision to privatise the airline. InterGlobe Aviation Ltd, which runs IndiGo, has already thrown its hat in the ring. Mint reported on 23 July private equity funds KKR and Co. and Warburg Pincus were also considering doing so.

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Updated: 15 Aug 2017, 04:47 AM IST
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