Thaindian News

New Delhi, June 14 (IANS) Beleaguered national carrier Air India will soon turn the corner once a revival plan, to be presented to the cabinet in a couple of weeks, is implemented, Civil Aviation Minister Vayalar Ravi said Tuesday.

The proposal is to be reviewed by a group of ministers headed by Finance Minister Pranab Mukherjee and aims to restructure the airline’s debt, infuse equity, hive off ground-handling and maintenance operations into separate entities and raise funds through a bond issuance.

“Wait a while. Let the group of ministers (GoM) go through the turnaround plan submitted by Air India. Let them pass it,” Ravi told IANS, adding that the plan if passed would be implemented immediately.

The airline had posted a net loss of Rs.5,551 crore in 2009-10, a decrease from Rs.7,189 crore in 2008-09.

“After it gets passed we will implement it there and then. Air India’s condition would then start improving,” Ravi added.

The urgency in the civil aviation ministry’s corridors to implement the turnaround plan came after the flag carrier ended another year in losses, said a senior Air India official on condition of anonymity.

“There was a meeting held in New Delhi recently. Huge losses were reported in 2010-11 but these losses have actually come down from the ones in previous years,” the official told IANS from Mumbai.

The official did not divulge any figures of net loss for 2010-11, but blamed a number of factors like high-oil prices, strikes and delay in shift from double flight code to single as also major factors.

“We are doing our best to mitigate losses, but we require to urgently implement the turnaround plan. Piling interest costs are also adding to the burden. Our debt is in the range of Rs.40,000 crore, including loans for buying new aircraft and for operations,” said the official.

Air India’s cumulative interest per annum amounts to Rs.3,200 crore, including Rs.1,800 crore for the 111 aircraft which it ordered since 2006.

“We have a very good load factor on our domestic and international routes. It is the interest that we pay for our loans. Once that (loans) is restructured into long-term loans, the financial burden would substantially come down,” the official said.

Air India wants to convert a majority of short-term loans worth about Rs.18,000 crore to long-term debt, thereby saving interest payments of around Rs.900 crore.

“We intend to save around Rs.900 crore on interest payment by converting 60 percent of short-term loans on which we pay anywhere around 10 percent to 12 percent interest,” the official said.

Last year, the central government had infused Rs.2,000 crore of fresh equity into the flag carrier in two instalments of Rs.800 crore and Rs.1,200 crore.

The flag carrier had also sent a proposal to the ministry for permission to raise Rs.5,500 crore by issuing bonds to a consortium of banks, to help restructure its long-term debts.