Centre has decided to infuse Rs 600 crore in the divestment-bound airline Alliance Air to restructure some of its debt and aid in alleviating its financial woes.
As per industry as well as government sources, the amount of Rs 600 crore (Rs 6,000 million) will be infused in two tranches of Rs 300 crore (Rs 3,000 million) each.
The first tranche is expected to be infused soon while the second tranche will only be released on the achievement of certain operational and financial milestones.
According to sources, the plan is expected to provide financial relief on the working capital front along with alleviating some debt of the airline.
At present, the airline has an external debt of around Rs 1,200 crore on its books. It has a turnover of more than Rs 1,000 crore per annum.
“The divestment process does not allow the airline to secure further borrowings. Thus, it was a critical move on part of the Centre to approve the capital infusion plan. This will aid the airline in facing the current financial turbulence,” sources told Fe.
In FY22, the airline had reported a net loss of Rs 4,473.92 million from a loss of Rs 3,599.32 million reported in FY21.
Consequent to the financial woes, the airline recently faced resentment of pilots, who protested against non restoration of their pre-pandemic pays.
Presently, Alliance Air operates to 56 destinations within India with over 130 departures per day.
Furthermore, the airline is a major operator of flights under the UDAN (regional air connectivity) scheme, operating around 60 flights daily.
It has a fleet of 18 ATR72-600, 2 ATR42-600 and 1 Dornier Do-228 aircraft.
The airline was an erstwhile part of Air India prior to the latter’s divestment.
Currently, it is operated as a division under the Air India Asset Holdings (AIAHL). It was founded in 1996 as a wholly-owned subsidiary of then Indian Airlines, which later merged with Air India.
In 2021, Tata Group bought the debt-ridden Air India from the Central government, thereby, Alliance Air, as the only airline under Centre’s control.