Government to infuse Rs 800 crore into Air India soon: Praful Patel
The government will infuse Rs 800 crore of equity into the cash-strapped national carrier Air India in two months, Civil Aviation Minister Praful Patel said today. The minister, however, added that the airline has to take immediate steps to cut costs and enhance revenues.india Updated: Nov 14, 2009 15:48 IST
The government will infuse Rs.800 crore of equity into the cash-strapped national carrier Air India in two months, Civil Aviation Minister Praful Patel said on Saturday.
"We are looking at equity infusion into Air India in two months," he told reporters on the sidelines of the inauguration of the country's first aerospace precision engineering special economic zone in Belgaum.
"We will be monitoring the monthly progress (of Air India) as we move to the next tranche of equity support."
The minister, however, added that the airline has to take immediate steps to cut costs and enhance revenues.
"We will also monitor the cost cutting and revenue enhancements measures, and based on that we will look into further equity support. As of now, we will infuse Rs.800 crore into Air India," Patel said.
Based on a monthly review of Air India's cost-cutting measures, the Group of Ministers (GoM) on Civil Aviation, led by Finance Minister Pranab Mukherjee, had Thursday recommended equity infusion in the carrier.
The GoM has asked the carrier to reduce costs by at least Rs.2,000 crore by the end of the current fiscal. Earlier, Air India had made a presentation before the GoM about its plans for cost cuts and revenue generation.
The Rs.800 crore equity infusion, once cleared by the cabinet, will cover a part of the funds promised by the government to rescue the ailing national carrier.
According to a top civil aviation ministry official, Air India could get Rs.800 crore in two equal parts. The cabinet is likely to approve the ministry's proposal this month.
Earlier, a committee headed by Cabinet Secretary K.M. Chandrasekhar had proposed Rs.5,000 crore capital infusion for Air India over the next three years, with the condition that the airline would cut costs and raise its revenue.
The carrier is now desperately looking at reviving its market share. It was 18.6 percent last month, up from 17.5 percent in September and 16.6 percent the month earlier.
It has posted a loss of over Rs.5,500 crore during the current fiscal while its losses last fiscal were Rs.7,200 crore.
On the pilot's plan to go on strike against a cut in incentives, Patel said such actions would serve nobody's purpose.
"Going on strike does not serve anybody's purpose. In fact it defeats the purpose of the turnaround. The government support is coming and it should be coming in right spirit," he asserted.
The Indian Commercial Pilots' Association (ICPA) had said earlier this month that Air India pilots would go on a strike from Nov 24 against the management's decision to cut their performance-linked incentives.