Air India gets a breather: Beleagured airline gets Rs 2,100 cr as guaranteed borrowing from govt

After finding no takers for the beleagured Maharaja, the government is coming to its aid once again.  The government has guaranteed borrowing of Rs 2,100 crore, said RN Choubey, Secretary, Ministry of Civil Aviation (MoCA) according to a media report.

#NewsAlert | @airindiain gets Rs 2,100 crore Government guaranteed borrowing: RN Choubey, Secretary, Ministry of Civil Aviation (MoCA) pic.twitter.com/ebm4gMd7Zi

— News18 (@CNNnews18) September 4, 2018

Recently, a senior government official had ruled out the disinvestment of loss-making. Sources quoted a senior government official who told a Parliamentary panel that disinvestment of  Air India will not happen in “near future”. The Parliamentary Standing Committee on Transport, Tourism and Culture – headed by TMC leader Derek O’ Brien – had sought details about funds infused by the government into Air India, which has been making losses for long. Responding to a question about the disinvestment plan for Air India, Civil Aviation Secretary R N Choubey said, “not immediately, not in new future”, a member who attended the meeting told PTI. [caption id=“attachment_4410217” align=“alignleft” width=“385”]  File photo: Air India.
PTI pic[/caption] The proposed strategic stake sale of debt-laden Air India failed to take off in May and the government is now working on ways to revive the fortunes of the airline. According to the sources, various members sought details about taxpayers’ money infused into the carrier in the last few years. A Turnaround Plan (TAP) as well as a Financial Restructuring Plan (FRP) were approved for Air India by the previous UPA regime in 2012. Under these plans, the airline is to get budgetary support amounting to Rs 30,231 crore over a ten-year period and also equity support for the payment of principal/ interest of the non-convertible debentures. So far, the airline has received more than Rs 27,000 crore worth equity infusion. The carrier’s debt burden was more than Rs 48,000 crore at the end of March 2017. As per the disinvestment plan, which did not elicit any preliminary bids, the government had proposed to offload 76 percent equity share capital of the national carrier as well as transfer the management control to private players. The transaction would have involve Air India, its low cost arm Air India Express and Air India SATS Airport Services Pvt Ltd. The latter is an equal joint venture between the national carrier and Singapore-based SATS Ltd, according to the preliminary information memorandum. Air India will very soon get funds from the government for its day-to-day operations and will even place orders for a couple of aircraft, the government official said. The decision was taken at the high-level meeting convened by Union Minister Arun Jaitley. The meeting was attended by Piyush Goyal, who has been temporarily given the charge of finance ministry, Civil Aviation Minister Suresh Prabhu, Transport Minister Nitin Gadkari and other senior officials of finance and civil aviation ministries. “The airline is posting operational profits. None of the flights go empty. With all the cost efficient mechanism in place, we will continue improving its operational efficiency. There is no need to rush in for disinvestment as of now,” the official told PTI. The government is looking at turning around the company to ensure that it makes profits on overall basis before going in for listing. “Certain conditions have to be met before listing a company. Once Air India fulfills those, we will go in for an initial public offering and subsequent listing,” the source said. In June, the cash-crunched Air India, which delayed salaries for three months in a row, had sought an additional funding of around Rs 2,000 crore from the government to tide over the situation. “We have requested the government to restore equity infusion in the airline, which was stopped because of the proposed disinvestment. We are seeking an additional Rs 2,000 crore funds to deal with the present situation,” the official said on condition of anonymity. The airline was expecting these funds in July when the government moved the first batch of Supplementary Demands for Grants for 2018-19 in the Monsoon session of Parliament, a senior company official had said. --With PTI inputs