NEW DELHI: What can be a setback for the Air India, the Finance Ministry has opposed request of a bailout package from the Civil Aviation Ministry worth Rs.11,000 crore, citing the fiscal constraint and has communicated the same to the Prime Minister’s Office.
According to the sources in the Finance Ministry, the Civil Aviation Minister had approached the finance ministry with a request of fresh bailout package for the revival of ailing Air India to the tune of Rs, 11400 crore, after the plan to disinvest failed in May. The ministry says that the package would be utilised to reduce high-cost working capital loans of Air India.
However, the Finance Ministry, which is already managing revenue deficit and subsidies, is strongly opposed to the move.
“The cabinet has recently approved about 980 crore for the Air India. But government cannot eternally bail them out. We have to look at fiscal targets also. Even when the stake sale plan has not worked, the Carrier had to find out some way to be profitable. We are already opposed to the move and has communicated the same to the PMO,” a senior official from the Finance Ministry told TNIE.
According to the official the final call, however, will be taken by the PMO.
According to the government’s own admission in Lok Sabha, since 2012, Air India has received an equity infusion of Rs 27,195.21 crore till date. In the current financial year, the airline has received an equity infusion of Rs 650 crore up to June.
The recent infusion of Rs.980 crore will be used by the cash-strapped Air India to pay salaries and payment to vendors. It was delaying salaries of staff for last seven months.
However, the trouble is not just limited to Air India. High fuel cost is hitting the margins of all peers, including even super-efficient carriers like Indigo, which posted a 97 per cent drop in net profit and caused major financial stress for jet airways, which had estimated debt of Rs 943 crore. Jet Airways deferred announcing their June quarter numbers to an unspecified date. The development came late evening after the company's AGM on Thursday.