Air India gets Rs 500-cr govt guarantee for fund raising; national carrier has received over Rs 30,520-cr equity infusion since FY12

Air India's net loss in 2018-19 is provisionally estimated to be Rs 8,556.35 crore.

FP Staff December 21, 2019 11:14:33 IST
Air India gets Rs 500-cr govt guarantee for fund raising; national carrier has received over Rs 30,520-cr equity infusion since FY12
  • The government is likely to issue Expression of Interest (EoI) for 100 percent strategic sale in Air India in the fourth quarter of the fiscal

  • Facing acute financial crunch, Air India sought Rs 2,400 crore guarantee from the government to raise fresh funds to mainly meet its operational requirements

  • The amount of Rs 2,400 crore is part of the Rs 7,600-crore guarantee that was to be provided to the airline in the current fiscal

The  cash-starved national carrier Air India has got a boost in the form of a government has given a Rs 500-crore guarantee towhich will help it secure fresh funds for operational requirements, a senior airline official said. Striving to keep afloat due to liquidity issues, the loss-making carrier had last week sought Rs 2,400 crore guarantee from the government for raising funds to mainly meet its operational requirements.

"The government has extended Rs 500 crore guarantee to Air India. It was provided the airline on Wednesday," the official told PTI.

The sovereign guarantee will help the airline secure some funds, a part of which has already been drawn, he said adding," Air India is already in discussions with the banks.

The amount of Rs 2,400 crore is part of the Rs 7,600-crore guarantee that was to be provided to the airline in the current fiscal.

Air India's net loss in 2018-19 is provisionally estimated to be Rs 8,556.35 crore.

Last month, Minister of State for Civil Aviation Hardeep Singh Puri informed Parliament that Air India will have to shut business if it is not privatised.

The Air India Specific Alternative Mechanism (AISAM) has approved re-initiation of process for the the government's 100 per cent stake sale in Air India along with Air India Express and the carrier's stake in joint venture AISATS.

Air India gets Rs 500cr govt guarantee for fund raising national carrier has received over Rs 30520cr equity infusion since FY12

Air India Express. Image courtesy: Air India website

The government is likely to issue Expression of Interest (EoI) for 100 percent strategic sale in Air India in the fourth quarter of the fiscal.

According to the government, it has infused funds to the tune of Rs 30,520.21 crore in the flag carrier from financial year 2011-12 till 5 December.

Facing acute financial crunch, Air India sought Rs 2,400 crore guarantee from the government to raise fresh funds to mainly meet its operational requirements, according to airline officials.

One of the officials said there is a delay in payment of salaries for the month of November and is expected to be paid on Thursday.

The government is in the process of finalising the contours for divestment of debt-laden Air India a PTI report had said.

The officials said the airline has asked for Rs 2,400 crore sovereign guarantee in order to raise money to mainly meet its operational requirements. They said the amount of Rs 2,400 crore is part of the Rs 7,600 crore guarantee that was to be provided to the airline in the current fiscal.

An Air India spokesperson did not offer any comment on the issue.

On 27 November, Minister of State for Civil Aviation Hardeep Singh Puri told the Rajya Sabha that interests of Air India employees would be protected and there would be no job loss till its privatisation.

--With PTI inputs

Updated Date:

also read

Govt does not want Air India to go defunct like Kingfisher Airlines, says Ashok Gajapathi Raju
Business

Govt does not want Air India to go defunct like Kingfisher Airlines, says Ashok Gajapathi Raju

Air India has a debt of more than Rs 52,000 crore and is surviving on a Rs 30,000 crore bailout package extended by UPA govt in 2012

Coronavirus Outbreak: Air India unions challenge airline's decision to slash allowances by 10% in Mumbai High Court
Business

Coronavirus Outbreak: Air India unions challenge airline's decision to slash allowances by 10% in Mumbai High Court

Air India employee unions have moved the Bombay High Court against the airline's decision to slash allowances, which form a major part of the salary, by ten percent because of the impact of the coronavirus pandemic

Air India privatisation: Govt permits NRIs to own up to 100% stake in ailing national carrier; measure not in violation of SOEC norms
Business

Air India privatisation: Govt permits NRIs to own up to 100% stake in ailing national carrier; measure not in violation of SOEC norms

Allowing 100 percent investment by NRIs in the crisis-hit Air India would also not be in violation of Substantial Ownership and Effective Control (SOEC) norms.