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Wednesday, 11 July, 2018, 12 : 00 PM [IST]

AI seeks INR 2,100 cr from govt to meet operational needs

According to a report by Rhik Kundu in The Hindustan Times, national carrier Air India Ltd, which has asked the central government to revive its equity infusion after its sale plans stalled, is seeking INR 2,100 crore from the government to address its immediate operational needs, said two senior officials of the airline. However, this infusion will only take care of the airline’s short-term capital requirements and the national carrier could have to dip into the market again to raise money for its fleet and other expansion plans, which include future procurement of aircraft on lease.

“While the airline needs about INR 2,100 crore to address its immediate working capital and other operational requirements, it could need a larger amount in the longer term to lease planes and expand operations to compete with other domestic and international airlines,” said one of the officials, who did not want to be named. Pending aircraft orders of Indian airlines exceed 1,000. This is the third-largest in the world after the US and China. Low-fare carriers account for a large chunk of the order book, according to aviation consultancy Capa India. However, Air India could see its domestic market share drop to well below 10% as it has not increased its fleet size as much as its competitors, especially low-fare carriers, over the last few years. In a June 4 report titled Air India Privatisation Setback, Capa India said that the national carrier has plans to induct just nine aircraft, on lease, primarily for replacement rather than expansion. “As a result, Air India will continue to lose (domestic) market share and relevance, dropping well below 10% (from 12.8% during May 2018),” it said.

“The government is expected to infuse equity into Air India to fund its operational and working capital requirements,” said an aviation ministry official.

Air India, which has delayed payment of salaries to some of its employees during the last few months, had also floated a tender to raise INR 1,000 crore (from banks) in June to meet its working capital requirements.

 
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