Ministry for Rs 33K-cr aid for Air India by 2017

The aviation ministry has proposed aid of Rs 33,000 crore to cash-strapped Air India by 2017 as part of the government’s 12th Five-Year Plan, according to a working group report seen by Reuters.

The proposed aid would include equity infusion of Rs 19,900 crore into the loss-making carrier and Rs 11,200 crore for aircraft projects, including purchases and maintenance, according to the report. It added total debts of India’s airlines were expected to rise to Rs 2,000 crore in 2011/12, as these struggle with rising oil prices, high sales taxes on jet fuel and below-cost pricing driven by fierce competition.

State-owned Air India, which is burdened with a debt of Rs 400 crore, said its board had approved issuing Rs 7,500 crore worth of shares to lenders, as part of its financial restructuring. It gave no details on the exact stakes lenders may own.

A consortium of Air India’s lenders had last month given its approval for financial restructuring, a source previously told Reuters. Air India is expected to account for more than half of the projected total losses of Rs 300 crore for Indian airlines in 2011/12, the Centre for Asia Pacific Aviation has said.