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Panel on Air India provide in-principle approval for cash infusion

19-Jul-2011 9:35 AM

India's civil aviation minister Vayalar Ravi stated a group of ministers on civil aviation has "on principle" approved to pay Air India INR5.3 billion (USD119 million) in dues out of around INR12.2 billion (USD274 million) it owes to the carrier (Telegraph India/IANS/TNN/Economic Times/Reuters/PTI/Business Standard/Economic Times/Hindu Business Line, 18-Jul-2011). The panel also decided to infuse equity into the carrier but stated it would again meet next week to "take a final decision on the matter of more equity infusion", Mr Ravi said. According to Mr Ravi, a consensus had been reached to expedite the equity infusion and to implement the revival plan for the carrier. The panel is expected to decide on Air India’s turnaround and financial restructuring plans, prepared by the State Bank of India’s financial advisory arm SBI Caps, at its next meeting. The date for the next GoM meeting was not disclosed. Air India had expected the government to pay INR8 billion (USD179 million) as part of the dues on account of VVIP and evacuation flights. The carrier, which has debts of around INR400 billion (USD9.0 billion) it has incurred due to aircraft acquisition and loan costs, has requested a fresh equity infusion of INR12 billion (USD269 million) and the dues of around INR5.3 billion for operating the VVIP flights. The carrier is also seeking a total infusion of INR170 billion (USD3.8 billion) including INR50 billion (USD1.1 billion) in the current fiscal year. The airline is also in talks with banks to restructure its loans and reduce its interest expenses. Mr Ravi stated a consensus has been reached on expediting equity infusion and implementing the revival plan. Prime Minister Manmohan Singh has requested the GoM to come to a quick conclusion on the matter. "I will request (Finance Minister) Pranab Mukherjee to take expeditious decisions in the (Air India turnaround) matter," he has said.