A Group of ministers (GoM) headed by Finance Minister, Pranad Mukherjee last Friday discussed plans to invest more state funds into Air India. The group asked the Ministry of Civil Aviation (MoCA) to seek approval of the Reserve Bank for a plan to restructure Air India’s debt, although no concrete decisions were taken at the meeting.
The ministers discussed a recommendation from a panel of secretaries to infuse INR23,000 crore into the national carrier over the next 10 years, out of which INR6,600 crore could be invested in the current fiscal ending 31 March 2012.
“Though the meeting was inconclusive, we will go to RBI (Reserve Bank of India) in a week to get their view on financial restructuring, after which there will be another GoM meet. Thereafter, the cabinet will decide the matter of equity infusion of INR6,600 crore,” Vayalar Ravi, Minister of MoCA told the Economic Times after the meeting.
This equity infusion will be inclusive of the INR1,200 crore that the government has already provided this year. Over the last three fiscals, the government has injected INR3,200 crore by way of equity into the airline. Air India is in talks with lenders to convert a portion of short-term working capital, which comes to INR22,165 crore, into long-term loans as part of its financial restructuring plan. Long-term loans, which the airline had used to finance aircraft buys, account for a further INR20,000 crore of debt.