The government will continue to help Air India with liquidity infusion, the country’s state minister for civil aviation Jayant Sinha said Thursday, even as it continues to mull alternative mechanisms for the airline’s planned disinvestment after a failure of its first efforts to do so.
The cash infusion would be put in so the airline can “maintain its operations,” Sinha told reporters on the sidelines of an Air India-Boeing event.
The government has already allocated Rs 650 crore for the airline during the current financial year. The airline has appealed for Rs 2,000 crore additionally. Sinha didn’t elaborate how much money will be put into the airline.
The beleagured state-run carrier has been surviving for more than half a decade on cash handouts from the government even as it increased efficiencies to narrow down its net losses.
Meanwhile, a plan to divest the airline, envisaged for years but finally put into action by the Narendra Modi government this year, hangs in limbo, as the first call for bids received no takers by the deadline on the end of last month.
Several problems, primarily the government’s decision to retain a 24% stake in the airline, its massive debt and dues of over Rs 45,000 crore of which the new buyer will have to take on about 70% and no feasible solution for its inflated workforce—a huge burden on costs—were some of the problems internally communicated to the government by industry players as the reasons for the lack of interest.
The government is now looking at various alternate plans including a 100% sale or a public listing to carry out the planned divestment, even as it hurries to include it in its list of claimed successes before the general elections next year.
Source: Economic Times