AI seeks equity support from Govt
The cash-strapped state-owned company, Air India has requested the Government of India to provide equity support for restructuring of its high-cost debts into low-cost debts to bail the airline out of the worst-ever financial crisis, report Manish Tiwari & Samiran Saha.india Updated: Jul 30, 2009 22:24 IST
The cash-strapped state-owned company, Air India has requested the Government of India to provide equity support for restructuring of its high-cost debts into low-cost debts to bail the airline out of the worst-ever financial crisis.
Talking to Hindustan Times on Thursday, Air India CMD Arvind Jadhav said: "We went to the Committee of Secretaries recently with a request to look at our current situation, work out options and decide the form of assistance. All other details can be worked out subsequently."
As any company, Air India is also entitled for swap of high-cost debt to a low-cost debt. "But it's totally wrong to say Air India or SBI Caps ever asked for any fixed amount...Rs 15,000 crore or 20,000 crore from the government. That is not the case," the CMD added.
The company, he said, wants the government to give the comfort so as to carry out restructuring of its debts. "I would like to restructure my entire 16,000 crore debt. But I can’t understand since when restructuring of debt becomes taxpayers money as reported in the media," he quipped.
Jadhav said the Air India had gone to the government, showed its balance-sheet, current financial situation and discussed various problems. "For restructuring the balance-sheet, there is a need for capital infusion. It depends on government when it does the reality check and whether it is in position to give us capital infusion or not."
The government, said the CMD, is very positive and trying to ascertain what needs to be done for Air India's better financial performance and how to bring about financial operational efficiency in next 18 months. "Now the ball in the court of Union Financial Ministry," he said.
However, a decision on this issue should ideally be taken by August. "The money is not required in August itself but the decision should be taken fast so that we could work out our strategy," he said.
"My only angel investor is government," he said, adding it's for government to decide whether they want to be an angel investor whether they would like to put the money in or what is the form they would like to put in.
The CMD, however, added, "The government is entitled to know where we position Air India in the civil aviation industry -- whether the recession is going to be to be longer period of time or shorter period of time and when do we expect the recovery to start on."
When the recovery is not coming, he said, the company requires the equity infusion to the extent being asked by Financial Institutions. "Restructuring of high cost debt into low cost debt has to be done in any case."
At the moment, the company is managing from within its own resources. "When we don’t have money to pay our existing employees, I cannot recruit more people, he said adding "there was no point taking any extra revenue liability. All recruitments have stopped".
"I want to take 500 trainee pilots, engineers and cabin crews. But we don’t need them at the moment. I don’t know why recruitees are running here and there...even if they try, I'm not in position to take them," he added.