Mumbai: National carrier Air India Ltd, which has asked the central government to revive its equity infusion after its sale plans stalled, is seeking 2,100 crore from the government to address its immediate operational needs, two senior officials of the airline told Mint.

However, this infusion will only take care of the airline’s short-term capital requirements and the national carrier could have to dip into the market again to raise money for its fleet and other expansion plans, which include future procurement of aircraft on lease. 

“While the airline needs about 2,100 crore to address its immediate working capital and other operational requirements, it could need a larger amount in the longer term to lease planes and expand operations to compete with other domestic and international airlines," said one of the officials, who did not want to be named.

Pending aircraft orders of Indian airlines exceed 1,000. This is the third-largest in the world after the US and China. Low-fare carriers account for a large chunk of the order book, according to aviation consultancy CAPA India.

However, Air India could see its domestic market share drop to well below 10% as it has not increased its fleet size as much as its competitors, especially low-fare carriers, over the last few years.

In a 4 June report titled Air India Privatization Setback, CAPA India said that the national carrier has plans to induct just nine aircraft, on lease, primarily for replacement rather than expansion. “As a result, Air India will continue to lose (domestic) market share and relevance, dropping well below 10% (from 12.8% during May 2018)," it said.

“The government is expected to infuse equity into Air India to fund its operational and working capital requirements," said an aviation ministry official.

“The government is committed to provide Air India with necessary financial resources for its successful turnaround," the official said, without elaborating on the amount the government plans to infuse into the airline this time. An Air India spokesperson said that the equity infusion from the government has not come through yet.

“This is not in Air India’s hands. The government and the civil aviation ministry will have to decide on the amount and the time when they want to make this infusion into the national carrier," the spokesperson said.

Air India, which has delayed payment of salaries to some of its employees during the last few months, has also floated a tender to raise 1,000 crore (from banks) in June to meet its working capital requirements.

News agency PTI had on 3 June reported that Air India had raised 6,250 crore from various banks between September 2017 and January 2018 for working capital requirements and other needs.

Air India has a net debt of over 50,000 crore.

Jayant Sinha, minister of state (aviation), on 15 June said that the government is drawing up plans for equity infusion into the airline, which had been frozen after the announcement of strategic divestment of the carrier.

The Congress-led United Progressive Alliance (UPA) government had in 2011 earmarked 30,231 crore to the national carrier, which was to be infused into the airline during 2012-2021 on the condition that the airline achieved some of the key operational targets earmarked to it.

This was a part of the government-sponsored Turn Around Plan (TAP) that was charted to bring Air India back to profitability. Air India has not reported net profits since its merger with Indian Airlines in 2011.

Till date, the airline has received more than 26,000 crore under the bailout package announced by the then UPA government in April 2012.

Meanwhile, aviation consultancy CAPA India added in its report that the national carrier is expected to lose a total of $1.5-2.0 billion over fiscal years 2019 and 2020.

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