The government will infuse Rs 800 crore over the next two months in the financially crippled state run carrier Air India for some financial stability.
“Initially equity infusion will be of Rs 800 crore based on that (how the airline fares in these two months) we would look at further equity support,” civil aviation minister Praful Patel said on the sidelines after inaugurating the manufacturing facility of Quest Global, India’s first aerospace special economic zone.
“We will monitor monthly progress of Air India as we move to the next tranche of equity support. Cost cutting and revenue enhancement measures adopted by the airline will also be looked at,” Patel said.
However Patel did not disclose the total equity sought by the ailing Maharaja.
A group of ministers headed by finance minister Pranab Mukherjee had earlier on Thursday said government would monitor Air India’s cost cutting and revenue enhancement measures and infuse government equity accordingly.
The ministerial panel has also asked the airline to cut cost and enhance revenue upto Rs 2,000 crore for further government support and monitor the airline’s financial progress on a monthly basis.
Regarding the strike threat by the airlines’ pilots from November 24, Patel said “the strike would defeat the very purpose of the turn around a plan.”
“Going on strike does not serve anybody’s purpose in fact it defeats the revival plan of the airline. Government support is coming and it should be taken in the right spirit,” Patel said.
The state run carrier has reported losses of over Rs 5,500 crore in the last fiscal 2008-09 and has an annual interest outgo of Rs 1,500 crore on its debt. It has a working capital over draft of Rs 16,000 crore.