Beleaguered flag carrier Air India has prepared the ground to seek release of the second installment of the earlier approved Rs 5,000-crore bailout package from the government. The company is set to approach the Centre following its board meeting on Sunday to seek another Rs 1,200-crore infusion. The airline has said without fresh funds, its projected accumulated losses would be around Rs 17,000 crore by 2013, from the present Rs 12,000 crore.
The government has already provided Rs 800 crore as equity to the airline in February. It lost about Rs 5,200 crore in the 2009-10 mainly due to weak demand, low yield and under utilisation of resources.
The company?s board, which is meeting in Mumbai over the weekend, has drawn a grim picture of its financial position, thus preparing the case for immediate relief.
Further, since the government has linked further release of funds to the airline?s efforts to cut costs, a set of revenue-generating measures has also been prepared.
Release of the second tranche would help it reduce the interest burden and improve debt-equity ratio, the airline maintains. Air India chairman and managing director Arvind Jadhav had recently met finance secretary Ashok Chawla seeking more equity infusion by the government in order to restructure and reschedule its loans.
Air India has a total working capital loan of about Rs 18,000 crore besides Rs 22,000-crore-plus on its books for aircraft acquisition.
The criticality of the financial position can be gauged from the fact that the board agenda includes discussion on selling the airline?s assets and buildings besides ways to reduce interest burden and enhance revenue.
?The airline has admitted that its finances are critical and net worth is getting negative day by day,? civil aviation ministry officials aware of the board?s agenda told FE.
The company would present a fresh turnaround plan to its board, which constitutes newly appointed independent directors?former IAF chief Fali H Major, Mahindra group vice-chairman and managing director Anand Mahindra, Ambuja Realty group chairman Harshavardhan Neotia, NRI businessman Yusuff Ali and Ficci secretary-general Amit Mitra.
Among the measures to improve cash flow, the airline board would look into the proposal to provide more direct connectivity. The airline has decided to operate 35-45 feeder aircraft.
?As part of its long-term goal, Air India has set its revenue target at Rs 35,000 crore by 2015, of which nearly 30% would be non-passenger,? the sources said.
Indian Airlines expects to generate Rs 2,000 crore from MRO, Rs 1,500 crore from ground-handling and Rs 3,000 crore from cargo by 2015.
An email query sent to the airline went unanswered.
