NEW DELHI: Things aren’t getting better for debt-laden Air India as dues to vendors have hit unmanageable levels, forcing the aviation ministry to write to the finance ministry asking it to urgently decide on funding the national carrier.
The letter, sent earlier this week, said that the airline is finding it difficult to conduct operations due to financial problems and rising vendor dues. Aviation secretary RN Chaubey called on the finance ministry to clear the bailout package to ensure funds could be infused quickly, said a senior aviation ministry official, who did not want to be identified.
“The airline is not able to manage it because there are enough dues to be paid to various vendors,” said the official, “We have asked the finance ministry to decide quickly on equity infusion into Air India, as the airline’s liabilities to vendors is rising and the airline is struggling financially.”
Air India has been seeking government help to clear its dues to foreign and Indian lenders apart from vendors. The government has provided interim support of about Rs 980 crore as equity and provided a sovereign guarantee to raise Rs 2,000 crore from banks. Of this, Air India has already raised Rs 1,500 crore.
EThad reported last week that oil companies have asked the national carrier to clear its dues on a daily basis. Air India owes close to Rs 10,000 crore to oil companies and airport operators, among others. The government failed to find takers for a 76% stake disposal plan for Air India in May this year.
DISCUSSING STAGGERED INFUSION
While disinvestment has been ruled out for now, the government wants the airline to be in better financial shape for sale after the 2019 Lok Sabha elections.
To keep the airline afloat, the aviation ministry had sought a waiver of Rs 30,000- crore debt and a cash infusion of Rs 10,000-11,000 crore. The finmin ministry has rejected a one-time funding but is still discussing the possibility of a staggered infusion
If approved, this would be the second bailout for Air India in a span of five years. In 2013, the then UPA government approved an equity infusion of Rs 30,231 crore until 2020-21 and the airline has already received about Rs 28,000 crore of this.