The government will infuse equity of Rs 1200 crore into the ailing national carrier Air India (AI) in the fiscal 2011-12.
The budget documents state that, “As a part of the process for financial restructuring of National Aviation Company of India Ltd. (now Air India Ltd.), an amount of Rs 1,200 crore has been provided.”
AI had got Rs 2000 crore from the government in 2010-11 and the aviation ministry had requested a similar amount for the next fiscal.
As per a revised turnaround plan, vetted and modified by consultancy firm Deloitte Touche Tohmatsu (India), it was projected that AI would need an equity infusion of around Rs 17,500 crore to come out of the current mess. The plan would be placed before the airline’s board soon.
Senior AI officials, however, expressed hope that the government would infuse additional equity at a later stage.
AI has suffered losses to the tune of Rs 1791.38 crore in the first quarter of 2010-11 on account of increase in fuel prices, increase in interest and depreciation costs, increase in wage bill and an increase in leasing and maintenance cost.
AI had claimed to have cut down its losses by 23% to Rs 5,551 crore in the fiscal 2010 from Rs 7,189 crore the previous year. However, a CAG supplementary audit questioned the figure, stating that AI had understated losses by over Rs 3000 crore.