- Education And Career
- Companies & Markets
- Gadgets & Technology
- After Hours
- Banking & Finance
- Energy & Infra
- Case Study
- Web Exclusive
- Property Review
- Digital India
- Work Life Balance
- Test category by sumit
Ministry Proposes Rs 33,000 Cr For Air India
Photo Credit :
The proposed aid would include an equity infusion of Rs 19,900 crore into the loss-making carrier and Rs 11,200 crore for aircraft projects, including purchases and maintenance, the report shows.
The report says the total debts of India's airlines are expected to rise to $20 billion in 2011/12 ending March as they struggle with rising oil prices, high sales taxes on jet fuel and below-cost pricing driven by fierce competition.
State-owned Air India, which is burdened with a debt of $4 billion, said on Thursday its board had approved issuing Rs 7,500 crore worth of shares to its lenders as part of its financial restructuring. It gave no details on the exact stakes lenders may own.
A consortium of Air India's lenders last month gave broad approval to its financial restructuring, a source previously told Reuters.
Air India is expected to account for more than half of the projected total losses of $3 billion for Indian airlines in 2011/12, the Centre for Asia Pacific Aviation has said.
Domestic air passenger traffic is expected to grow by 12 per cent a year until 2017, the working group report shows.
The aviation ministry also proposes to spend Rs 17,500 crore on the development of airports, the report shows.
A-I To Issue $1.4-Bn Preference Shares To Banks
Meanwhile, Air India's banks will own a chunk of the loss-making state carrier after its board approved issuing preference shares worth Rs 7,500 crore to lenders led by State Bank of India as part of a financial restructuring.
A spokesman for the airline said it was not yet decided how big a stake the banks will own.
Earlier this year, lenders to private sector rival Kingfisher Airlines took a stake in the loss-making carrier controlled by liquor baron Vijay Mallya.
A consortium of Air India's lenders last month gave broad approval to its financial restructuring, a source had told Reuters, providing relief for the cash-strapped airline reeling under $4 billion of debt.
Air India's lending group has 26 banks. In addition to State Bank of India, IDBI and Bank of Baroda also have heavy loan exposure to the airline.
The restructuring plan must be approved by the federal government before it is implemented.
India's airlines are struggling with surging oil prices, high sales tax on jet fuel and below-cost pricing driven by fierce competition, leading to losses for most of them.
Indian airlines are forecast to lose up to $3 billion in the fiscal year that ends in March 2012. State-owned Air India, operating on government life support, is expected to account for more than half of that, the Centre for Asia Pacific Aviation has said.
Air India said its passenger revenue rose 12.3 per cent in November, compared with the year-ago period, and domestic load factor stood at almost two-thirds of its total capacity.
Kingfisher in March issued shares equivalent to 23.4 per cent of the airline to a consortium of 13 banks, also led by State Bank of India, after conversion of compulsory convertible preference shares at Rs 64.48 a share. The stock closed on Thursday at Rs 21.25.