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HindustanTimes Thu,23 Oct 2014

Air India to seek Rs. 7,200 crore from budget for revival

Tushar Srivastava, Hindustan Times  New Delhi, June 26, 2014
First Published: 23:07 IST(26/6/2014) | Last Updated: 12:38 IST(27/6/2014)

Ailing national carrier Air India (AI) is likely to seek a budgetary support of Rs. 7,200 crore for 2014-15, a company source said on Thursday.

Upbeat over its entry into Star Alliance, a global alliance of 26 international carriers, the airline, which is surviving on a bailout funded by taxpayers' money, remains confident of turning profitable by 2018. AI's entry into Star Alliance should see its revenue increase by 5%.

The government has promised to pump in Rs. 30,231 crore into the bleeding carrier by 2021, out of which AI has received Rs. 12,200 crore (till January this year). AI has managed to bring down its aircraft acquisition loan from Rs. 22,000 crore to Rs. 18,000 crore while it working capital loan is around Rs. 21,000 crore.

"Air India funding of $1.2 billion for 2014-15 is no surprise. The government has no option but to continue funding for a long time as it refuses to accept privatisation as an option," said Kapil Kaul, South Asia chief executive of aviation consultancy, Centre for Asia Pacific Aviation (Capa).

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Capa estimates that AI will post a loss $900 million to a $1 billion (Rs 6,000 crore) in 2014-15.

"From 2015-2016 onwards, the airline will drain up to $1 billion per annum from the public exchequer over the next decade with no meaningful improvement in the carrier's situation. A dramatically different approach is required to that which has been pursued in the past," according to a recent Capa report.


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