New Delhi, April 30: The government may clear Air India’s proposal for fresh equity infusion but is unlikely to accept the state-run carrier’s request for a Rs 2,750-crore bailout package.

The increased equity will help Air India (AI) to leverage loans to buy planes.

Top officials said a plea for a Rs 1,231-crore infusion, which could take its total equity to nearly Rs 1,400 crore, may be accepted.

The airline needs the equity funding to leverage loans for its Rs 44,000-crore fleet acquisition programme to buy some 111 aircraft.

In the current financial year, it needs to pay Rs 8,165.44 crore to pay for the new aircraft even as it faces an accumulated loss of over Rs 4,300 crore.

Air India’s equity after merger with Indian Airlines has been calculated at Rs 145 crore. The capital to borrowing ratio after taking on loans to complete its fleet acquisition works out to 1:169. Even after infusion of fresh equity, the ratio would only improve to 1:29.

According to officials, a fresh round of equity infusion may not be enough for Air India and the government may have to agree to issue fresh capital to the public to raise more funds later.

“That is possible only when the market for airlines improves and along with it Air India’s balance sheet looks healthier and the stock market picks up,” they added.

Many government officials are advising Air India to delay its plane buy so that the fleet expansion does not take place during the recession. The decision to raise equity may be based on such an advice.

Air India has argued that the government, as the owner of the national carrier, should provide a bailout as the cost of the merger. But this argument has found few takers in the government.

According to AI, the merger has meant shutting down offices, redeploying personnel and fleet and bringing in new software to integrate ticketing systems. If the government agrees to the soft loan package for AI, officials feel, it may prompt PSUs in other sectors to seek such bailouts.

However, Air India has pointed out that national carriers across the globe are being given such bailouts.

Development Bank of Japan is considering Japan Airlines’ plea for 200 billion yen or roughly a $2-billion loan on easy terms. Air China has asked for a three-billion-yuan or $439-million state help. The Obama administration is also evaluating bailout pleas from loss making US airlines and airports.

Air India executives said they requested for a soft loan package after a bailout of sorts was given by the government to other airlines and airports.

Early last year, the government had allowed airlines, including Kingfisher and Jet Airways, to pay their jet fuel dues, running to over Rs 2,900 crore, in six interest-free instalments.

Airports, including Delhi and Mumbai, which complained they were unable to contain modernisation costs or offset them, were allowed to charge higher fees at airports.

Delhi airport, for instance, has been allowed to charge an ad hoc user fee of Rs 200 per domestic passenger and Rs 1,300 per international passenger for 36 months starting March 1.