Air India likely to be put on cash-and-carry mode over dues

MIAL threat over non-payment of dues worth Rs 450 crore; AI needs to pay Rs 200 crore by June

The Mumbai International Airport Ltd (MIAL) has threatened to put Air India on a cash-and-carry mode as the airline has not paid its dues since the last several months.

In a letter issued to Air India chairman Rohit Nandan on May 16, MIAL said Air India would not be able to secure a credit term to settle dues in case it failed to pay Rs 200 crore to it by June 1.

Air India’s total dues, which include charges for landing and parking, are Rs 450 crore. Its monthly dues to MIAL are Rs 25 crore and it has not been making regular payments for the past 15-18 months. An Air India spokesperson said the airline had paid Rs 650 crore to Delhi airport and Rs 100 crore to Mumbai airport last year. About Rs 50 crore was paid to both airports last month.

Air India has over 50 daily domestic and international departures from Mumbai.

According to an India Ratings & Research report, dues from Air India made up over 66 per cent of Mumbai airport’s receivables as on January. The report, which rated MIAL’s debt, said the airport operator had initiated steps to improve receivables from Air India in partnership with the International Air Transport Association (IATA). Under the arrangement, IATA deposits Rs 10 crore with MIAL from the pool of Air India’s collections each month. But the arrangement has not worked, the source added.

Air India did not respond to an email query on the topic.

MIAL’s warning to Air India coincides with the change of government at the Centre.

Earlier this month, Air India received Rs 1,375 crore in equity infusion from the Centre as a part of its financial restructuring plan. Till now, the government has infused over Rs 14,000 crore equity in the airline but high operating costs have led to huge losses.

Air India’ losses are estimated to have widened to Rs 5,400 crore in FY14, as against the target of Rs 3,989 crore, primarily due to high operational costs.

The airline has also not met the target of making an operational profit of Rs 1,040 crore and is likely to report operational profit of Rs 770 crore.

The national carrier had narrowed its net loss to Rs 5,100 crore at the end of FY13 and had reported a net loss of Rs 7,100 crore in FY12.

The second quarter of last financial year was the worst one for the airline, when it missed its revenue target by over Rs 700 crore due to lower passenger load and a fare war in the domestic market, sources said. The national carrier, however, has met its revenue target of Rs 19,300 crore set for FY14.