Another bailout in the works for Air India

Deepshikha Sikarwa/Mihir Mishra/ Aug 13, 2018

The government is considering yet another giant rescue package to make state-owned
Air India commercially viable following the failure of its disinvestment plan earlier this
year. This will include a Rs 30,000 crore loan write-off and a cash infusion of Rs 10,000-
11,000 crore, said people with knowledge of the matter.
Accumulated losses will also be written off as part of the package that’s being considered by
the finance ministry, allowing the company to clean up its balance sheet, said the people
cited above. “Small cash infusions are not making any dent. We want to put the airline in a commercially viable situation,” said one of the officials cited above.

Sources in the y aviation ministrsaid that a decision to work on another bailout for Air India
was taken at a meeting in the Prime Minister's Office with an intent to improve the financial
and operational situation of the national carrier.
Aviation secretary RN Choubey confirmed to ET that such talks are being held. “There are
discussions going on to work out a package for Air India. As for the nature and extent of
support for Air India, we will not able to share any detail at this stage,” he said in a text
message to ET.

If approved, this will be the second bailout for Air India in a span of five years. In 2013, the
then United Progressive Alliance (UPA) government approved an equity infusion of Rs
30,231crore until 2020-21. The airline has already received about Rs 27,000 crore of this.

While disinvestment is ruled out for now, the government wants the airline to be in shape
for sale once the 2019 Lok Sabha elections are over. The latest plan follows the failed bid
to sell about 76% of Air India in March, primarily due to the government’s decision to retain
a 24% stake. Government think tank Niti Aayog had proposed a 100% stake sale.
If the package is approved, the airline will only have loans against aircraft left on its books.
That’s expected to make the carrier commercially viable. “Airline should service the loans
on aircraft. The idea is to let it run like any other commercial airline,” said the official cited
above.

Reference

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