The government would infuse additional equity into ailing Air India provided it saves at least Rs. 2,000 crore this financial year by implementing cost-cutting measures, Civil Aviation Minister Praful Patel said today.
“We are broadly looking at an equity infusion linked to its monthly performance parameters and we are only looking at till March (2010). This is not the total equity infusion being looked at for Air India,” he told reporters after an almost two-hour meeting of a Group of Ministers on the issue.
Based on the national carrier’s performance till the end of the financial year, the government would be “able to finally take a call at the end of March as to what will be the final support which the government will provide,” he said.
The airline, which has shown a net loss of Rs. 5,548.26 crore in 2008-09, is seeking a total equity infusion of Rs. 5,000 crore.
The GoM, headed by Finance Minister Pranab Mukherjee, was given a presentation on the cash-strapped carrier’s plans to reduce costs and enhance savings by CMD Arvind Jadhav and Civil Aviation Secretary M. Madhavan Nambiar. The meeting was also attended by Petroleum Minister Murli Deora, Home Minister P. Chidambaram and Deputy Chairman of Planning Commission Montek Singh Ahluwalia.
“If recovery is visible, so will the government’s support for further equity (infusion),” Mr. Patel said.
Maintaining that an interim plan till March next year has been worked out, he said the GoM decided to review Air India’s performance in accordance with the “certain laid out parameters” on a monthly basis till March.
“I appeal to everybody concerned, including all sections of employees, that this is a time of challenge. We must be able to contribute meaningfully in a way when everybody should put their best foot forward. I am sure if that happens, there can be a turnaround,” the minister said.
This was the second meeting of the GoM, which came two months after a Committee of Secretaries approved the demand of the airline for infusion of Rs 5,000 crore as equity and assistance, but with stiff riders to improve performance and cut costs.
Air India had lost around Rs 7,200 crore in the previous fiscal. In its book, the company has a debt of Rs. 15,000 crore, out of which Rs 11,000 crore is the high-cost borrowing.
The airline’s total revenue has also fallen to Rs. 13,479 crore in FY’09 from Rs. 15,252 crore during the year-ago period