Prime minister to be approached again to bail out Air IndiaSeptember 22nd, 2008 - 5:49 pm ICT by IANS
New Delhi, Sep 22 (IANS) The civil aviation ministry will approach Prime Minister Manmohan Singh once again for a bailout package for Air India to help it tide over losses of more than Rs.21 billion totted up last fiscal, a senior ministry official said here Monday. Civil aviation minister Praful Patel, who took up the issue with the prime minister informally in June, will meet Manmohan Singh once again for a Rs.23.5-billion bailout package, the official told IANS.
The official, seeking anonymity, said Patel’s office has placed a request for a formal meeting with the prime minister, who started a two-nation 10-day visit to the US and France Monday.
“The aviation industry is witnessing a slowdown worldwide owing to high aviation fuel costs and so is Air India. It needs immediate help. The bailout would not only help us get back on our feet but also hasten the completion of the Air India and Indian merger announced last year,” he said.
What has also put the airline in a financial squeeze is its ambitious plans to upgrade its fleet with an investment of Rs.440-billion. The problem is, it only has an equity base of Rs.1.45 billion.
Faced with an acute funds crunch, National Aviation Company of India Ltd (NACIL), which runs Air India, had approached the aviation ministry with a proposal for equity infusion of Rs.13.5 billion and another Rs.10 billion as soft loan.
It was against this backdrop that the ministry - which feels NACIL would find it difficult to raise funds through equity infusion and loan without government support - decided to approach the prime minister.
Air India spokesperson Jitender Bhargava declined to talk on the matter, saying: “The matter is before the government”.
The ministry official said the government is exploring a conditional bailout package NACIL, based on its operational efficiency.
The loss-hit national carrier, incidentally, has begun adopting cost-cutting measures to prevent its financial situation going into further tailspin.