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GoM meet to discuss Air India performance

india Updated: Oct 27, 2011 14:22 IST

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A group of ministers (GoM) led by finance minister Pranab Mukherjee that is looking into Air India's troubled financial situation is expected to meet on Thursday to monitor the national carrier's performance and consider granting additional equity.

"The GoM will meet today (Thursday). The GoM would primarily look into the airline's performance as well as consider granting an additional equity," an airline official said.

The official did not divulge details of the equity to be granted to the airline but said the grant would be substantial.

"The GoM would also consider our proposal of converting some of our short-term loans into long-term loans, thereby allowing us to save Rs 900-1,000 crore in interest payments per annum."

The GoM would also discuss the airline's order of 27 Boeing Dreamliners it placed in 2005-06.

"We expect some direction on this issue," the official said.

Recently, civil aviation minister Vayalar Ravi said the government was not considering selling its stake in Air India.

"My first priority as a civil aviation minister is to bring Air India in no-profit, no-loss (situation)," he had said.

The last GoM meeting took place Aug 18 when the airline's credit limit by the state-run oil marketing companies (OMCs) was extended by two-three months.

Earlier the state-run OMCs had put the flag carrier on a cash and carry basis -- which basically meant that the airline would have to pay every time it bought fuel from these companies.

Currently the airline owes Rs.2,300 crore to the OMCs, from whom it buys Rs.17 crore of fuel daily.

The GoM was formed to look into the airline's turnaround and financial restructuring plan (TAP), which is currently under a review process by a sub-committee of secretaries.

According to official figures, Air India's cumulative losses amounted to Rs.22,165 crore apart from a Rs.22,000 crore debt burden to buy new aircraft. The debt-ridden carrier has to pay almost Rs.3,200 crore as interest to its lenders.