Budget: Air India to get Rs.1,200 crore fresh equity

February 28th, 2011 - 5:42 pm ICT by IANS  

Pranab Mukherjee New Delhi, Feb 28 (IANS) National carrier Air India, reeling under a financial crisis, will now get an additional equity of Rs.1,200 crore ($250 million).Finance Minister Pranab Mukherjee, in his 2011-12 budget presented in the Lok Sabha Monday, said: “As a part of the process for financial restructuring of National Aviation Company of India Ltd., an amount of Rs.1,200 crore has been provided.”

The proposal for restructuring was based on inputs from the national carrier and put up by newly-appointed Civil Aviation Minister Vayalar Ravi.

Meanwhile, sources in Air India said the budgetary allocation was far lower than what was actually demanded or even expected from the government.

“This fresh equity of Rs.1,200 crore is far less than what we actually require,” a senior Air India official told IANS, while adding that the airline requires Rs.17,500 crore to come out of its financial difficulties.

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

The airline management that time had proposed an infusion of Rs.10,000 crore which was examined by a committee of secretaries, led by Cabinet Secretary K.M. Chandrasekhar.

The committee then decided to provide Rs.2,000 crore to the airline. Apart from the current infusion of Rs.1,200 crore, the airline has already received another Rs.800 crore in February.

Air India had reported a decrease in its net loss for the fiscal 2009-2010, which stood at Rs.5,551 crore as against a net loss of Rs.7,189 crore in the fiscal 2008-2009.

According to the airline, the results were muted due to increase in depreciation cost by Rs.164 crore and interest, and financing charges of Rs.769 crore, which was an increase of 46 percent, on induction of more aircraft.

The total expenditure also decreased by 8 percent and stood at Rs.19,035 crore as compared to Rs.20,668 crore in the last fiscal.

The company added that it has recorded an improved operating performance with a nine percent increase in passenger load factor at 64.8 percent from 59.5 percent.


– Rs.1,200 crore ($250 million) equity infusion from the government

– Asked to rationalise wage structure

– Equity infusion aimed to revive the ailing airline

– The government released Rs.800 crore ($178 million) fund for revival of the airline.

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