Air India seeks Rs 800-cr equity bailout | india | Hindustan Times
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Air India seeks Rs 800-cr equity bailout

The Civil Aviation Ministry is set to approach the Union Cabinet next week seeking a Rs 800 crore equity infusion to save the troubled Air India. The government has asked the airline to initiate “extraordinary” measures to financially turn around the state-owned carrier.

india Updated: Feb 03, 2010 21:41 IST
Bhadra Sinha

The Civil Aviation Ministry is set to approach the Union Cabinet next week seeking a Rs 800 crore equity infusion to save the troubled Air India. The government has asked the airline to initiate “extraordinary” measures to financially turn around the state-owned carrier.

“We are moving the Cabinet for equity infusion of Rs 800 crore. The approval is likely next week,” Civil Aviation Minister Praful Patel told reporters after a meeting of the Group of Ministers headed by Finance Minister Pranab Mukherjee.

The state-run carrier has losses to the tune of Rs 7,200 crore.

The airline would need a massive cost-cutting exercise and extraordinary measures to stay afloat, he said.

The minister was cryptic on whether lay-offs would be part of the cost-cutting measures..

"Cost cutting is very imperative and the problem has to be taken upfront. In the next meeting we will take some major decisions,” he said, but did not elaborate on what these measures would be.

Air India has a target of reducing cost by Rs 2,000 crore by March. This is unlikely to be met, the minister said, adding “So far costs have been cut by Rs 700-800 crore.”