The finance ministry will be releasing Rs 980 crore to cash-strapped Air India as part of the supplementary grant sought by the civil aviation ministry.
The finance ministry will be releasing Rs 980 crore to cash-strapped Air India as part of the supplementary grant sought by the civil aviation ministry, an official told FE. This grant, which will help the airline in clearing some of its loan repayments due to banks and vendors, is likely to be released next week, the official added.
Reportedly, the carrier is separately raising a short-term loan of Rs 1,500 crore from Bank of Baroda. The state-run airline owes around Rs 1,800 crore to its vendors which includes lessors and banks.
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In the FY19 Budget, the government had set aside a grant of Rs 650 crore for the carrier.
A supplementary grant is made when the initial grant approved by Parliament falls short. The additional grant needs to be presented and passed by Parliament.
The demand for an additional grant was presented before Parliament during the recently concluded Monsoon session. While it was approved by the Lok Sabha, the Rajya Sabha could not take it up. Since it is a money Bill, the Rajya Sabha’s assent is not a must but the grant can only be made 14 days after the conclusion of the session; this period ends on August 24.
Since Air India was in need of funds, it had sought an interim help from the finance ministry in the form of `500 crore, pending the approval of the Budgetary grant. However, officials said since the grant will be made next week, the demand for interim relief stands superseded.
At the time of the initial Budgetary grant, the government was in the process of divesting its majority 76% stake in Air India but the process failed as no private player evinced interest in taking over the airline. After this, the airline had sought Rs 2,000 crore from the government to meet operating expenses for 2018-19.
Air India has a total debt of `48,781 crore. Its last reported losses, which was for FY17, stood at Rs 5,765 crore.
The government is also looking at transferring the non-core assets and a major portion of debt of Air India to a special purpose vehicle as part of a revival package for the carrier. Though the government wants to take a second shot at divesting its 76% stake in the airline, it has said it cannot be done immediately and would take some time.
On Wednesday, after a delay, Air India paid flying allowance for June to its pilots. This was after a section of them had threatened to stop operations if the dues were not cleared immediately.