A proposal for equity infusion of Rs 6,600 crore for Air India has been mooted by the Civil Aviation Ministry to enable the airline clear its massive dues.
A Group of Ministers (GoM), which is expected to meet later this month, may take a view on the plan which also includes restructuring of loans of Rs 43,200 crore and vendor dues amounting to Rs 4,600 crore, official sources said.
After an ad hoc payment of Rs 500 crore to partly clear its dues to Air India on account of VVIP travel and evacuation flights, government would soon release another tranche of Rs 705 crore to it.
Air India sought Rs 6,600 crore as part of a "big dose" of equity infusion to clear its dues, saying most of the equity infusion it has received so far has gone to pay off staff salaries and part of interests on loans, besides daily bills of jet fuel.
The ailing national carrier has a working capital loan of Rs 21,200 crore, long-term loan on fleet acquisition of Rs 22,000 crore, vendor dues and accumulated losses worth Rs 20,320 crore, as per the latest figures.
While welcoming equity infusion by the government, airline officials maintained that this would not solve all the problems, though a series of steps were being implemented to slash monthly losses.
"We have demanded Rs 6,600 crore from the government. Most of the latest tranche of Rs 1,200 crore would go to pay salaries and clear some dues," a senior official said, adding that the airline actually needed "a big dose of equity infusion and immediate approval of our financial restructuring plan".
At its meeting on August 18, the GoM had directed oil companies not to keep Air India on cash-and-carry system, that is daily payments for uplift of jet fuel, and put it on a month''s credit line.
If approved, the airline would also create an escrow account in which at least Rs five crore would be put daily to avoid any default on payments to the oil companies.
From now on, Rs 450 crore would be paid every three months by the airline. This would provide some cushion to enable it pay staff salaries, the officials said.
The national carrier had been put on cash-and-carry mode by public sector oil companies from December last as it owed more than Rs 2,000 crore to them.
Since then, Air India has been paying about Rs 17 crore a day for lifting aviation turbine fuel for its normal operations, a practice that has been stopped following the GoM directive.
Earlier, the oil PSUs had slashed supplies in May-June forcing the cash-strapped carrier to cancel as many as 147 flights and incur a loss of Rs 10 crore.
Source: http://www.moneycontrol.com
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