Air India wants govt to provide Rs 2,500 crore as debt; airline owes Rs 4,500 cr in fuel dues, hasn't paid in 200 days

In the current fiscal Air India hasn't got any equity support from the Centre and is now finding it hard to meet working expenses

FP Staff August 23, 2019 14:30:36 IST
Air India wants govt to provide Rs 2,500 crore as debt; airline owes Rs 4,500 cr in fuel dues, hasn't paid in 200 days
  • The airline said that its financial performance this fiscal is very good and it is moving towards a healthy operating profit.

  • he cash-strapped airline said that in the absence of equity support, it cannot handle the huge debt service liabilities

  • Air India owes three state-owned oil firms close to Rs 4,500 crore in unpaid fuel bills with payments being delayed by almost seven months

Air India has reportedly sought immediate emergency funding of about Rs 2,500 crore from the government as debt, a media report said.

According to The Times of India, in the current fiscal Air India hasn't received any equity support from the Centre and is now finding it hard to meet working expenses.

The airline said that its financial performance this fiscal is "very good and it is moving towards a healthy operating profit." The cash-strapped airline said that in the absence of equity support, it cannot handle the huge debt service liabilities.

Air India owes three state-owned oil firms close to Rs 4,500 crore in unpaid fuel bills with payments being delayed by almost seven months, forcing retailers to snap supplies, senior officials said on Friday.

Indian Oil Corp (IOC), Bharat Petroleum Corp Ltd (BPCL) and Hindustan Petroleum Corp Ltd (HPCL) on Thursday afternoon stopped jet fuel or ATF supplies to Air India at six airports - Kochi, Pune, Patna, Ranchi, Vizag and Mohali - over payment defaults.

Air India wants govt to provide Rs 2500 crore as debt airline owes Rs 4500 cr in fuel dues hasnt paid in 200 days

Representational image. Reuters

"Air India has a 90 day credit period, which means they have to make payment for fuel they buy today by 21 November. But Air India had not been making payments and the credit period was now over 200 days," a senior official at one of the three state-owned oil firms said.

Total unpaid dues to three fuel retailers stand at close to Rs 4,500 crore.

"They (Air India) offered to pay Rs 60 crore which is a drop in the ocean of what they owe," another official at one of the fuel retailers said.

IOC, BPCL and HPCL more than a week back jointly wrote to Air India seeking expeditious clearance of the dues, failing which they will be constrained to take action.

"Air India, however, failed to provide a clear roadmap to clear dues, forcing us to stop supplies," the official said.

Another official said Air India gets financial support from the government while for oil firms there is no such help.

"Aviation Turbine Fuel (ATF) pricing was deregulated in April 2002. And since then we have to run this business without any subsidy support from the government," he said.

At present, the government only provides some subsidy on LPG to help roll out its ambitious Ujjwala scheme of providing free cooking gas connections to poor. There is also a subsidy on kerosene supplied through the public distribution system (PDS).

A senior Air India official had on Thursday said that oil firms stopped fuel supplies to the airline at Cochin, Visakhapatnam, Mohali, Ranchi, Pune and Patna around 4 pm.

Air India has debt of over Rs 58,000 crore.

With PTI inputs

Updated Date:

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