Government invest Rs 1 200 crore in Air India (12-Jun-2010)
Government would invest another Rs 1,200 crore in equity in Air India over the next few months, said Civil Aviation Minister Praful Patel.
Speaking to pressperson on the sidelines of the annual summit of the International Air Transport Association (IATA), here in Berlin, Patel said that government will assess the situation & review the performance of the airline only after the next tranche of equity investment is done.
Last year the government invested Rs 800 crore in the cash-strapped airline as equity. Patel however denied any decision regarding divestment in the airline ~at the moment~.
Patel said that ~It is imperative that we assess the situation after (a total of) Rs 2,000 crore is infused as equity. Rs 1,200 crore will be given in the next few months.â€
Clarifying that there were no talks of divesting the airline in the government, he said, in answer to a question on it, that ~at the moment, the decision is not to disinvest and we stand by the policy of the government. Government''s decision is to have a national carrier and it shall continue to be so.~
Answering a question as to whether the government was considering any ~course correction~ on the merger of Air India and (erstwhile) Indian Airlines, as it has been receiving criticism from various quarters, the minister said that ~no, nothing of the sort. We have to make sure that it works well. We have to see how it performs (after the equity infusion). There has been no government subsidy to Air India~.
Strengthening his argument, he said officials from all airlines attending the Summit have opined that ~mergers do not happen overnight. It is an ongoing process which has to be achieved over time. Air France-KLM have taken six years. Nobody has said merger is a one-day process.~
Expressing his views on the course of action as taken by the government on merger of Indian Airlines and Air India, he said, pointing to the global credit crisis, consolidation was ~inevitable and nothing unusual~ as costs were on a rise while margins were under pressure.
Speaking on the course of action that the government is now taking to rescue the troubled airline, he said that there were several options before the government to help the airline come out of it, the government could have allowed the airline to go to the market to raise funds, or go for an Initial Public Offer (IPO) or give it furthermore equity support, and he said that ~In this case, government chose the third option~.
Expecting better days for the air carrier, he said that ~the worst is over for all (Indian) airlines, including Air India~.
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