Government mulling over investing more in Air India: Praful Patel

MUMBAI - Civil Aviation Minister Praful Patel has said the government would consider putting in more capital into state-run Air India if the national carrier improves its operational performance.

“The government has put eight billion rupees into Air India in the last fiscal year and has so far allocated 12 billion rupees in its current fiscal budget to help the airline reduce its losses and debt, which has been mounting,” Patel told reporters here.

“The government while appointing the GOM (Group of Ministers) also had discussed these issues and said that based on performance parameters, we will look at equity induction in a phased programme,” he added.

Patel said the airline is currently going through a debt restructuring process as it looks to clean up its balance sheet with SBI Capital managing its overall debt recast.

“Financial restructuring would obviously include component of many things, one would be of course to reduce the cost of the debt. Because the interest rates which Air India has borrowed it would be certainly very difficult to come out of the difficulty, so I would say replace the high cost debt with low cost debt,” he added.

The carrier will restructure the working capital loan through a mix of bonds guaranteed by the government over the next four years, Air India said in a separate statement on Sunday.

It also said it would raise additional capital from the sale of land and buildings or use them as security for fresh loans.

Air India Chairman Arvind Jadhav has said the airline, which incurred a loss of 54 billion rupees in the year to March 31, 2010, expects to pare its losses by around 75 percent this fiscal year.

The carrier said it expected a 29 percent increase in its operating revenue as air traffic improves on a rebound in business travel.

Air India has said it has no plans to cut jobs. (ANI)