Civil Aviation Minister: Equity infusion into Air India 'has neither been timely, nor adequate'
India's Minister of Civil Aviation Ajit Singh, addressing the members of Consultative Committee for the Ministry of Civil Aviation, commented (02-Dec-2013) on the situation at Air India and noted that "the equity infusion by the Govt has neither been timely, nor adequate". Outlining details of the carrier's Turn Around Plan, Mr Singh explained, "Under the Turn Around Plan till date, the Government has infused an equity of Rs.12200 crores in the last 3 years. Equity infusion by the Government has been linked to achievement of certain milestones like OTP, Yield, PLF etc. by Air India. AI’s performance has been improving constantly and it has been meeting most milestones laid out in the TAP. PLF has risen from the levels of 65-68% in previous years to 72% in 2012-13, which is above the target of 69.5% set in the TAP. The network yield per revenue kilometre has risen to Rs. 4.31 in the last financial year, against a TAP target of Rs. 3.53. The network yield per revenue kilometre has been maintained above Rs. 4 in the current year also. The OTP for the network for the year 2012-13 is 77%, which is below the TAP target of 85%. However, at the metros OTP has been maintained above 85%. The fleet utilisation has exceeded the TAP target for A319, A320 and A321 aircraft for the operating fleet". He added, "AI’s revenue increased nearly 10% in the last financial year 2012-13 vis-à-vis 2011-12. The Company has recorded appreciable cost saving through freezing of recruitment in non-essential areas, saving in interest cost due to restructuring of working capital loans, reduction of booking agency commissions grounding of ageing fleet. The operating loss and cash loss have also declined significantly in the last financial year due to restructuring of routes. As a part of this exercise, AI has rationalized it’s loss making routes as a result of which more number of routes are meeting the Cash cost of operations. The Company for the first time since merger has become EBIDTA positive in the year 2012-13". While noting the adverse conditions in the operating environment, Mr Singh noted that there has "been a shortfall in equity infusion to the tune of Rs. 3574 crores, leading to a liquidity crunch". To meet its working capital requirements, with the support of a GOI guarantee, Air India has had to seek short term working capital loans from the banks which "would result in additional interest burden to the Company". [more - original PR]