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Air India gets cash prop to service debt

Flight plan

New Delhi, Feb. 18: The government has provided Rs 5,500 crore in the interim budget to national carrier Air India to service the huge debt taken by it to buy a fleet of 111 Boeings and Airbuses.

The government has pledged the sum to the carrier as part of its equity infusion plan. The national carrier had, however, asked for Rs 8,000 crore for the financial year 2014-15.

Air India has so far got Rs 12,200 crore from the government as part of the promised Rs 30,231 crore equity infusion by 2021.

As on December 31 last year, Air India’s outstanding debt stood at Rs 26,033 crore and working capital loans were over Rs 21,125 crore.

According to civil aviation ministry officials, Air India had suffered an estimated loss of Rs 3,989.58 crore in 2013-14, lower than Rs 5,490.16 crore in 2012-13, Rs 7,559.74 crore in 2011-12 and Rs 6,865.17 crore in 2010-11.

The national carrier earned revenues of Rs 20,259.24 crore and incurred total expenses of Rs 24,248.82 crore in 2013-14, minister of state K.C. Venugopal said.

The Comptroller and Auditor General had criticised the government’s decision to acquire 111 aircraft, of which 68 are Boeing planes, and dubbed it as “a recipe for disaster”.

Terming the move to acquire so many planes risky, the CAG had said the aircraft acquisition had contributed predominantly to the airline’s massive debt liability.

In its report tabled in Parliament, the public audit body had called the merger of two erstwhile state-run carriers — Air India and Indian Airlines — ill-timed and said the financial case for the merger was not adequately validated prior to the merger.

“The entire acquisition (for both Air India and Indian Airlines) was to be funded through debt to be repaid through revenue generation, except for a relatively small equity infusion of Rs 325 crore for Indian Airlines. This was a recipe for disaster and should have raised alarm signals in the ministry of civil aviation, the Public Investment Board and the Planning Commission,” the report had said.

The report dealt with several aspects of the ailing national carrier’s losses, fleet acquisition, merger, huge debt burden and delay in joining the global airline grouping Star Alliance.

Air India expects to raise Rs 2,100 crore from selling five of its Boeing 777-200LR jets to Abu Dhabi-based Etihad Airways and another Rs 5,250 crore by way of a sale-cum-leaseback arrangement for its Boeing 787 Dreamliner aircraft, thereby raising Rs 7,350 crore in aggregate.

 
 
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