Air India to request more government help

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By TESTCustomwebLP TESTCustomwebLP October 11, 2010 14:33

Air India to request more government help

Although Air India has already been infused with Rs 1,200 crore to help pay down its debt, indications are that the airline will need to ask for another Rs 2,000 crore from the Indian government in the next financial year to repay its massive debt.

Official estimate shows that the airline would require Rs 3,000-Rs 4,000 crore annually to pay off its debt. The debt carries a monthly interest average of Rs 200 crore, while the debt each month stands at about Rs 300 crore. With this considered, the airline is expected to request another tranche of Rs 2,000 crore as equity at some time in the next financial year.

Air India is also expected to seek cabinet approval to operationalise its six Strategic Business Units (SBUs) when it has received the funds. The SBUs relating to low cost airline, cargo, Maintenance, Repair and Overhaul (MRO), grounding handling, engineering and related business would be operationalised as separate profit centres to enhance revenues.

The management also plans to seek government’s concurrence to review all agreements with its 14 unions and start re-negotiations with them.

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By TESTCustomwebLP TESTCustomwebLP October 11, 2010 14:33
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