Big relief for Air India, Centre to carry burden till it's sold off

Minister of State for Civil Aviation Jayant Sinha has said that the government will provide the required capital for smooth functioning of Air India untill it gets turned around or gets sold.

The statement from the minister comes days after the national carrier received no applications for the Expression of Interest (EoI) it invited for the privatisation of the airline.

Speaking during an aviation event held in Mumbai on Thursday, Sinha told reporters that the government is deliberating the reasons for receiving a lukewarm response for the EoI and steps will be taken to address the concerns of the investors. One of the major concerns of the investors have been the government holding 24% stake in the airline after the privatisation for next three years.

Air India, with a debt of over Rs 55,000 crore, has been on life support from the government in which it was assured of receiving Rs 30,000 crore as part of the turnaround plan for 10 years. The airline is currently said to be losing about Rs 10 crore daily.

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However, after the government announced plans to privatise the airline, all decisions, including the payment of installment by government, came to a standstill. This affected the working capital of the airline as there were reports about the employees’ salaries getting delayed for the third consecutive month.

The airline management then approached the banks to finance around Rs 2,000 crore for it.

Source: DNA Money