Air India’s parent firm seeks capital infusion, soft loanFebruary 26th, 2009 - 6:15 pm ICT by IANS
New Delhi, Feb 26 (IANS) National Aviation Co of India Ltd (NACIL), the parent company of national carrier Air India, has sought an equity induction of Rs.1,231 crore (Rs.12.31 billion/$245 million), along with a soft loan of Rs.2,750 crore (Rs.27.5 billion) from the government, Civil Aviation Minister Praful Patel told parliament Thursday.
“The airline industry globally, including the Indian airline industry, is passing through one of the most critical periods in its history,” Patel said.
The minister highlighted the decline in passenger traffic on account of the global recession, and decline in profitability due to rising competition as two of the factors impacting NACIL’s financial position.
He also cited the steep increase in aviation fuel prices between April and September last year, depreciation of the rupee and the increase in borrowing costs from banks due to the liquidity crunch as being some other reasons for the capital requirement.
Patel said it is necessary to ensure that the equity base of the company is adequate in order to support its capital requirement and improve its debt-equity ratio.
NACIL’s aircraft acquisition programme is worth about Rs.44,000 crore (Rs.440 billion/$9.7 billion), he said.