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Thursday, 16 August, 2018, 09 : 15 AM [IST]

Air India board to meet tomorrow for finalising plan for financial aid

As per an ET report by Mihir Mishra, the board of debt-ridden Air India will meet on Friday to finalise its proposal for a financial package from the government. “The financial package has a lot of elements that include loan waiver and equity infusion,” a senior Air India executive told ET, requesting not to be named. Once finalised, the proposal will be sent to the government for approval.

The board meeting assumes significance as it will be the first for its new independent members — Aditya Birla Group Chairman Kumar Mangalam Birla and ITC Chairman YC Deveshwar.

The package includes waiver of working capital loans to the tune of INR 30,000 crore and cash infusion of INR 10,000-11,000 crore.

As part of the proposal, accumulated losses will also be written off, allowing the company to clean up its balance sheet. This is already being considered by the Finance Ministry.

The airline has a total debt of INR 48,447 crore. Of this, it owes INR 17,360 crore to aircraft leasing companies and the rest is working capital loans. The latter component is likely to be written off. The airline had accumulated losses of Rs 46,800 crore at the end of March 2017, which is also set to be waived.

Some analysts said the government should have waived off these loans at the time of divestment, rather than doing it now.

People in the know said an interim infusion of funds is also likely to reach the airline as early as next week. “About INR 2,000 crore may be infused into the airline by next week,” said an official, who did not want to be identified.

The government’s plan to restructure the national carrier’s finances has gained traction after it failed to find any takers for a 76% stake in the national carrier. While disinvestment is ruled out for now, the government wants the airline to be in shape for sale once the 2019 Lok Sabha elections are over, the people cited earlier said.

If this plan is approved, it will be the second bailout for Air India in a span of five years. In 2013, the then UPA government had approved an equity infusion of INR 30,231crore until 2020-21. The airline has already received about INR 27,000 crore of this. (Source: Economic Times)
 
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