Air India seeks Rs 5,000 crore additional equity

Air India is seeking an additional equity of Rs 5,000 crore from the government as it promises to squeeze its fleet size and reduce the wage bill of its 31,000-strong workforce.

The carrier had suggested the government inject Rs 5,000 crore of equity over a period of three years from this financial year, besides providing guarantee for low-cost working capital loans from banks, official sources said here.

The airline, which was starved of cash, had sought Rs 2,400 crore by the end of March next year, they said, adding that the carrier would need Rs 3,000 crore every three years to meet its expenditure obligations.

In a proposal presented to the Group of Ministers (GoM) last week, the airline said it could cut the fleet-size from the present 146 aircraft to 95 over the next two years by introducing new planes to replace the aged and leased ones.

The GoM, which met under the chairmanship of Finance Minister Pranab Mukherjee, made it clear to the ailing carrier that any assistance by the government should be matched by the airline through cost-cutting and revenue enhancement measures.

In a presentation to the GoM on its restructuring and turnaround programme, Air India CMD Arvind Jadhav said the carrier would reduce costs by about Rs 3,000 crore and enhance revenues by Rs 2,000 crore annually.

Among the steps initiated by the carrier is the introduction of leave without pay scheme, reduction in overtime and rationalisation of contractual and casual employees. Regarding “right-sizing” of its fleet, the sources said Air India was planning to sell off its three Boeing 777-400s after the Haj operations.