National carrier Air India would get Rs. 1200 crore more next fiscal as committed by the government in the annual budget, Civil Aviation Minister Praful Patel said Wednesday.
"This will be over and above Rs.800 crore ($160 billion) equity infusion which was approved by the government last month for Air India," Patel said, addressing reporters here on the sidelines of the International Exhibition and Conference on Civil Aviation.
"The government has committed for Rs.1200 crore for Air India in the annual budget. We will discuss this issue with the government after April 1," he said, adding this would help the airline tide over the cash flow problem and finance its fleet acquisition plans.
He said that the financial help to the airline by the government is only to raise it on its feet. "This does not mean that Air India would keep getting such monetary help from the government. This cannot be done indefinitely, for ever. The airline will have to generate and yield profits to keep it going," he added.
State-run Air India has posted a loss of Rs.7,200 crore in the last two financial years. The induction of fresh equity of Rs.800 crore was approved only after it adopted a turnaround plan.
The carrier is run by the National Aviation Company of India Ltd (NACIL). Following Rs.800 crore equity infusion, the NACIL Saturday decided to raise its working capital from Rs.17,000 to Rs.18,000 crore.
According to airline officials, the carrier's borrowings have risen from Rs.6,550 crore in November 2007 to Rs.15,241 crore in June 2009.
The cabinet is expected to meet soon to take a decision on Air India's plan to raise its working capital by Rs.10 billion (Rs. 1,000 crore).
The company's present paid-up equity capital is Rs.145 crore ($29 million) and that was found grossly insufficient for an aviation company of its size.
Wednesday, March 3, 2010
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