FinMin to finalise bailout package for AI next fortnight
New Delhi: The Finance Ministry would give
a final shape to a bailout package for Air India over the next
fortnight and present it before the second meeting of the
high-level Committee of Secretaries on August 29, official
sources said on Sunday.
At the first meeting on its financial restructuring
yesterday, Air India had sought government's urgent help and
urged for equity infusion of about Rs 2,500 crore and a soft
loan of Rs 10,000 crore for five years.
While the government may make only a partial contribution,
a major part of this package is likely to be through partial
disinvestment of government equity or issuance of initial
public offer, sources said.
Officials of the Finance and Civil Aviation Ministries
would sit with those from Air India in the next 15 days to
finalise the package proposals as discussed yesterday by the
Committee of Secretaries (CoS), they said.
The CoS, which is slated to meet every month to monitor
implementation of its recommendations to bring the national
carrier back to shape, would again meet on August 29 to vet
Once finalised, the proposal would be sent to the Union
Cabinet for its approval, sources said, adding that the
much-needed funding for Air India would be released by the
government only after this.
The government funding, either in the form of loan or
equity, would be linked with aircraft deliveries.
Air India, which is estimated to suffer a loss of Rs
7,200 crore in 2008-09, has been overburdened by its working
capital borrowings worth Rs 17,000 crore. It has overdrafts
from 15 banks. The carrier wants government to underwrite at
least Rs 10,000 crore of this burden.
The government yesterday asked the Finance Ministry to
examine the extent of a financial bailout for the airline, and
also the Petroleum Ministry to extend the credit limit on jet
fuel for at least three more months.
This was decided at the first meeting of a high-level
committee headed by Cabinet Secretary K M Chandrasekhar, which
vetted the ailing carrier's plans to cut costs and generate
revenue as also its fleet renewal plans to meet intense
competition in both domestic and international arena.