The new
civil aviation minister Vayalar Ravi is expected to meet Finance Minister Pranab Mukherjee sometime this week with the request to include Air India's (AI) additional stimulus package of Rs 2,000 crore in the forthcoming Union Budget, according to a civil aviation ministry official.
Vayalar's predecessor Praful Patel had been pushing for an additional Rs 2,000 crore package for financial year 2011-12.
The Centre anticipates AI's losses at around Rs 5,400 crore in the current financial year. It recorded a loss of Rs 7,200 crore in 2009-10, Rs 5,548 crore in 2008-09 and Rs 2,226.16 crore in 2007-08.
The government has already infused Rs 2,000 crore in two tranches of Rs 800 crore and Rs 1,200 crore last year - as equity in the carrier, under the revival plan and financial restructuring of the airline.
These funds which were meant to strengthen the airline's equity base has largely been used to settle AI's dues, which over the last few months have become more ominous with deferred salaries of 31,000 employees and a huge debt of over Rs 40,000 crore.
DESPERATELY SEEKING SUPPORT
- Ex-aviation minister Praful Patel had been pushing for a Rs 2,000 crore additional package from the government for financial year 2011-12
- Air India recorded a loss of Rs 7,200 crore in 2009-10, Rs 5,548 crore in 2008-09 and Rs 2,226.16 crore in 2007-08
- The government has already infused Rs 2,000 crore in two tranches of Rs 800 crore & Rs 1,200 crore last year as equity in AI as part of the revival plan
- The funds were meant to strengthen AI's equity base & settle its dues, which over the last few months have become more ominous with deferred salaries of 31,000 employees & a huge debt of over Rs 40,000 crore
- Of this, about Rs 18,000 crore is working capital loan taken from a consortium of banks
- Air India's five-year plan for financial revival by 2010-14 envisages revenue enhancement and expenditure reduction in phases
- It has hired global consultancy Deloitte to work out a financial restructuring plan for the company
- AI has largely failed to meet the target of the turnaround plan, which called for cut in costs by Rs 1,500 crore and increasing revenues by Rs 1,200 crore by the end of 2012
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Of this, as much as Rs 18,000 crore is working capital loan taken from a consortium of banks. AI has hired global consultancy Deloitte to work out a financial restructuring plan for the company.
AI's five-year plan for financial revival by 2010-14 envisages revenue enhancement and expenditure reduction in phases. But the airline has largely failed to meet the target of the turnaround plan which called for cut in costs by Rs 1,500 crore and increasing revenues by Rs 1,200 crore by the end of 2012.
Ravi met top AI officials recently to review the progress in implementation of the various cost-cutting measures besides its financial performance. He is understood to have told the carrier that it should gear up to meet the revival plans or else it would be difficult to expect any further revival package from the government.
AI has been trying to lower the interest rates on its loans by two per cent by securing government guaranteed convertible bonds, an issue on which the finance ministry may take a final decision.
AI has also to brief the Board for Reconstruction of Public Sector Enterprises (BRPSE) to justify its claims for government funding. The BRPSE falls under the heavy industries ministry, now headed by Praful Patel.
The airline, has maintained that it has posted an operating surplus for the second month with a cash profit in December.
AI said it clocked Rs 49.48 crore in operating surplus as against Rs 21.66 crore in November.
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