After granting Rs 1,200 crore to the ailing Air India, the government has decided to take the driver’s seat to chalk out the turnaround plan of the national carrier. It has specifically directed the airline as to how the money should be spent.
Accordingly, the Air India management has been asked to spend Rs 550 crore towards clearing the dues of the oil companies’, Rs 475 crore towards repayment of loans taken from Exim Bank and another Rs 100 crore to settle dues of spare parts venders.
“The ministry has this time decided to monitor how the funds are used and this has been conveyed to the airline,” a civil aviation ministry official told FE. The government has started monitoring Air India’s performance very closely.
However, an Air India board member said the government is the owner of the airline and it is good if direction comes from them to improve the financial health of the carrier.
The government had early last year approved a Rs 2,000-crore bailout package for the airline and subsequently allocated Rs 800 crore towards it. The recent Rs 1,200-crore infusion is the second tranche of the package.
The close monitoring of the airline is evident from the fact that in the last one month, civil aviation minister Praful Patel has twice reviewed the performance of the company. Sources said the ministry would hold a meeting on today and tomorrow to finalise a uniform policy for the erstwhile Indian Airlines and Air India employees and the financial restructuring.
The full board of Air India is expected to consider on Wednesday a financial restructuring plan prepared by consulting firm Deloitte.
Air India is estimated to have an accumulated loss of over Rs 12,000 crore as on March 2010 and is struggling to repay bank loans. The carrier has a working capital loan of Rs 20,000 crore and long-term loan of about Rs 22,000 crore on its balance sheet.