Air India to get Rs 1,713 crore as equity support

The centre has agreed to grant equity support to Air India under the Rs 30,000 crore bailout package

GN Bureau | November 28, 2016


#Air India   #equity support   #bailout package  

 State run carrier Air India will receive less than half of the equity support it sought from the government this fiscal. The national carrier had sought Rs 3,900 crore from the government, while the latter has agreed to grant only Rs 1,713 crore in 2017 fiscal, The Financial Express reported.

The government is granting equity support to Air India under its plan of Rs 30,000 crore bailout package, the report said.
 
Sources said due to less financial support from the government, Air India is likely to face hardships to meet its operational and financial targets. Notably, for the first time in a decade, Air India posted an operating profit of Rs 105 crore in the last fiscal.
 
“Air India is going to induct new aircraft and would require funds for that and to meet other key expenses. The only way left is to approach the banks which means rise in our interest cost,” an official said. 
 
According to the report, during the April-June quarter of the current fiscal, the airline registered an operational loss of Rs 246.14 crore. The target fixed by Air India for operating profit for the first quarter of 2016-17 was Rs 87.28 crore. The reason attributed for the loss during the quarter was decline in revenue yields by around 6 percent over the budgeted target resulting in decline in passenger revenue. Fall in cargo revenue compared was also emerged as one of the reason behind depleting earning.
 
Sources said the national carrier, this year, is slated to induct 14 Airbus A320 aircraft and 6 Boeing Dreamliner (787) and three 777 aircraft on lease. The airline also needs additional manpower to run a new fleet of aircraft.
 
 

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