Air India, which has been facing massive losses over the past few years, is on the path of recovery and the government would back it to see that it regains its financial strength in the next three years, Civil Aviation Minister Praful Patel said tonight.
"Air India is certainly on the path of recovery. Its losses have started coming down ... the situation is improving," the Minister told reporters after a 90-minute meeting with Finance Minister Pranab Mukherjee.
Patel said the airline was in the process of implementing a roadmap for financial, commercial and organisational restructuring whose benefits would start showing results in the next three years.
The Minister said the government has already decided to give an additional tranche of equity of Rs 1200 crore in the current fiscal, after having infused Rs 800 crore as equity in the last financial year.
His statement came in the backdrop of National Aviation Company of India Limited (NACIL), which runs the national carrier, inviting offers for long-term loan of USD 1150 million to refinance the purchase of 21 aircraft and spares at low interest rates.
The last of the 21 Airbus aircraft, mostly of the A-320 family of planes, was delivered in April this year.
The earlier loan for aircraft purchase was taken from Indian scheduled banks and financial institutions with the 100 per cent government guarantee.
Air India recorded a loss of Rs 5,500 crore in 2009-10 which have been estimated to rise to Rs 7,000 crore this year.
The meeting with Mukherjee was attended by the members of the Board including newly-appointed independent directors like former IAF chief Fali Homi Major.
Earlier in the day, the NACIL Board held a meeting during which "new ideas" were given by the new Board members to beef up the financial performance of Air India, which Patel said were also being considered.
Observing that "the worst is over" for Air India, Patel had earlier said that Air India's losses, which averaged at Rs 400 crore per month, had started coming down by at least Rs 100 crore per month.
This is the first time since the March 2007 merger that the national carrier had witnessed any sign of recovery.
The airline has also started experiencing improvement in yields with a rise in passenger traffic and witnessing a nearly 17 per cent growth in daily passenger carriage so far this month.
With the upswing in passenger carriage in April this year, Air India's domestic market share rose to 18.2 per cent, bringing it on par with other full service carriers.