Panels to review AI restructuring plans

The Group of Ministers looking into Air India's turnaround plan will set up two sub-committees to review the airline’s restructuring plans and examine its Rs 1,100-crore bill for VVIP and evacuation flights. The issue of equity infusion in Air India will be taken up by the cabinet shortly and a cabinet note will be prepared in two weeks.

This was decided at the GoM meeting on Wednesday, which was attended by Finance Minister Pranab Mukherjee, Petroleum Minister Jaipal Reddy and Civil Aviation Minister Vayalar Ravi. The meeting was held in the backdrop of the financial crisis the airline has landed itself in, and has been unable to pay its creditors and 30,000 employees.

The sub-committee with representatives of the Planning Commission, finance ministry and civil aviation ministry will review the airline’s turnaround plan, and the other will examine its demand for VVIP and evacuation flights.

Air India has demanded Rs 350 crore for operating the flights and an additional Rs 800 crore towards salaries of staff and maintenance of the Boeing 747 planes used for VVIP flights. So far, there has been no consensus about paying the amount for salaries and maintenance. Two weeks ago, the government released Rs 250 crore for clearing some of its dues. Air India has been making losses since 2007, but its financial health has worsened. To come out of the mess, it has come up with a turnaround strategy. Apart from proposing an increase in revenue by Rs 5,000 crore and reduction in expenses, AI has also proposed a debt restructuring exercise. It has a working capital debt of Rs 18,000 crore and annual interest burden of Rs 3,200 crore.

The airline has proposed conversion of 60 per cent loans to long-term debt and balance into preference shares. This will help the airline cut down interest costs.