Air India to use Rs 6,500-cr infusion to pay debt, dues

Air India, the national carrier, will utilise Rs 6,500 equity infusion provided in the Union Budget for paying aircraft loan, interest on non-convertible debentures and term loans and overdue creditors.

Air India received an additional infusion of Rs 1,000 crore over and above the Rs 5,500 crore committed in the interim Budget in February. The additional sum will enable the airline meet its funding requirement.

Over Rs 15,700 crore was sanctioned as equity infusion for the national carrier during 2012-14 under the turnaround plan. However, only Rs 13,200 crore was released till now, leaving a shortfall of about Rs 2,500 crore. This was bridged by borrowing from banks following a central government guarantee. An Air India source said the fresh equity infusion of Rs 6,500 crore includes backlog of over Rs 2,500 crore and the current year fund requirement of Rs 3,400 crore. This will be used to pay aircraft loans and interest on non-convertible debentures. Also Air India has to pay about Rs 400 crore in interest on term loans it availed in the last two years. The funds will also be used to pay overdue creditors.

Air India Chairman Rohit Nandan told mediapersons that the funds allotted will be spent as outlined in financial restructuring plan.  The total budgetary allocation to the civil aviation ministry and its various departments increased from Rs 8,502 crore last financial year to Rs 9,474 crore, the ministry said in a press release. The major chunk includes equity to Air India.

Airport Authority of India has received a budgetary support of Rs 79 crore, including Rs 22 crore, for the construction of the airport at Pakyong in Sikkim. The Budget document shows AAI has got a non-plan support of Rs 2,134 crore. The ministry said there was a plan to develop 200 low-cost airports over the next twenty years and the government had proposed construction of 15 additional airports under the greenfield airport policy. The budgetary support of Rs 50 crore has been provided to the Directorate General of Civil Aviation to pursue its plan scheme. The Bureau of Civil Aviation Security will get Rs 40 crore for implementing its plan schemes.