Govt Approves Rs 800 Cr Equity Infusion into Air India (19-Feb-2010)
The government approved Rs 800 crore equity infusion into Air India.
However, previously, the government had approved equity infusion of Rs 800 crore in Air India.
However, the airline has been incurring heavy losses for the past few years - Rs 2,226 crore loss in 2007-08 and about Rs 5,500 crore loss in 2008-09.
Previously, it was said that several pilots flying these air craft, are also on their way out, as national carrier Air India plans to phase out Boeing 747-400 and A-310 freighters.
Air India has already terminated the service contracts of 30 senior most commanders flying these planes and many more are on the chopping block.
The service contract of 30 pilots have been terminated effective from February 18.
Air India currently has six Boeing 747-400 and two A-310 cargo carriers in its fleet.
On the other hand, recently it leased out two another A-310 freighters to Delhi-based cargo airline, Aryan Cargo.
Previously, Civil Aviation Minister Praful Patel stated that the government is expected to give clearance to Rs 800 crore equity fund infusion into Air India.
This can happen only if Air India takes extreme cost reduction measures, which could mean pay cuts for its large workforce.
Air India may finally get the Rs 800 crore it has been so desperately seeking since it lost Rs 7200 crore and needs the money to service its high debt.
Moreover, Air India has plans to hive off its cargo business into an autonomous unit by April 1 stated Air India Cargo SBU Head Anita Khurana.
She said that the hived off unit will cater to the cargo market needs while they are working out some joint points with our own sales team, staff and balance sheet.
However, it was said that Air India (AI), which is awaiting a Rs 800-crore equity infusion from the government, may require over one billion dollar to overcome its financial woes.
It is said that the airline would require at least one billion dollar for rebuilding itself, estimating that AI''s total losses this fiscal would mount to $800 million in 12 months ending March 31.
It was also said that the Export-Import Bank of the US and NACIL, the holding company of national carrier Air India, have signed an agreement worth $1.1 billion to support financing of sale of Boeing airplanes to the Indian carrier.The financing will support the sale of Boeing B777-200LRs and B777-300ERs to be operated by Air India and B737-800s to be operated by Air India Charters, the EXIM Bank said.
The Parliamentary Standing Committee on Transport, Tourism & Culture chaired by Sitaram Yechuri puts a question mark on the merger of Air India & Indian Airlines.
The 51st report of the committee deals with issues arising out of the merger & its impact on Civil Aviation Sector.
Moreover, it was said that Air India is expected to get a new Chief Operating Officer from January 2010 and is in the process.
NACIL is the holding company formed after the merger of Air India and erstwhile Indian Airlines while Air India had embarked on a time-bound operational and financial turnaround plan, which envisages pruning costs, increasing yields and making profits.
Meanwhile, The government said that Air India incurred a loss of Rs 7,226 crore during the last 2 fiscals and had incurred a loss of Rs 2,226.16 crore during 2007-08 while it has expected to incur a loss of Rs 5,000 crore during the year 2008-09.
Additionally, Civil Aviation Minister Praful Patel stated that Air India is expected to get the first tranche of equity infusion by December while the national air-carrier was initially looking at around Rs 800 crore for the first two months.
On the other hand, Civil Aviation Minister Praful Patel stated that the government will put in additional equity into the sick Air India provided it saves at least Rs 2,000 crore this fiscal by executing cost-cutting measures.
The government will decide at the end of March as to what will be the final support which the government will provide based on the national carrier''s performance till the end of the fiscal.
Air India Limited is the national airline of India based in Mumbai, flying a worldwide network of passenger and cargo services with 159 airplanes. The National Aviation Company of India Limited administers the state-owned Air India and Indian Airlines merger
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