After failed disinvestment, Air India rushes for loan as cash runs out
Cash strapped national carrier Air India is desperately seeking a Rs 1,000 crore short-term loan to run its day-to-day operations. The airline has already held back salaries of its 11,000 employees for three consecutive months.
The airline has stated in the bid document that the Rs 1,000 crore loan will be drawn in June in one or more tranches. It has requested banks to submit their financial bids by June 13. The tenure of the loan will be one year from the date of availing the loan but the airline has kept the option of renewing the loan open after that period.
Air India has already borrowed Rs 6,250 crore from various banks between September last year and January this year for working capital requirements and other needs. The debt-ridden airline, in which government’s attempt to sell 76 per cent stake failed to get even a single bidder, has not paid salaries for the month of May and a spokesperson had said yesterday that the salaries are expected to be disbursed by next week.
The government, which had approved strategic disinvestment for Air India in last June, had on May 31 this year said no initial bids were received for the proposed stake sale.
Air India has also sought restoration of the equity infusion by the government in the carrier. The loss-making airline has already received more than Rs 26,000 crore under the bailout package announced by the former UPA government in April 2012. The UPA government had approved a turnaround plan under which Air India is to receive a total equity infusion worth Rs 30,231 crore up to 2021, subject to meeting certain performance thresholds.
However, it has been getting the money despite not meeting the milestones set for the turnaround. Air India’s projected net loss for 2017-18 is estimated at Rs 3,579 crore. The national carrier Had made a loss of Rs 3,643 crore in 2016-17.
The carrier, which has a debt burden of about Rs 50,000 crore till March last year, had been receiving about Rs 3,000-4,000 crore equity infusion on an average per fiscal from the government till 2013-14. However, after that the amount was gradually reduced. For 2018-19, the airline has been allocated Rs 650 crore.
Meanwhile PTI reported Civil Aviation Minister Suresh Prabhu as saying that the future course of action for Air India disinvestment process will be decided by the group of ministers as no initial bids were received for the proposed stake sale of the debt-laden national carrier.
He said that all alternatives will be discussed by the Air India Specific Alternative Mechanism (AISAM), headed by Union Minister Arun Jaitley. The future course of action will be decided by the group of ministers.
On whether the government would dilute the bidding norms to attract players, he said that the decision will be taken by that group of ministers only. There are several alternatives before Air India. All alternatives will be discussed by the group and (they will) decide the best possible alternative in the given situation, he said.