AI directors meet PMO official

With the government planning to infuse Rs 1,200 crore as additional equity in Air India (AI), four independent directors of the national carrier today discussed the airline's financial position with a top official in the Prime Minister's Office (PMO).

Their meeting with T K A Nair, Principal Secretary to the Prime Minister, came amid firm indications that the Cabinet Committee on Economic Affairs would take up the equity infusion issue in the next few weeks.

A Cabinet note on equity infusion has already been circulated by the Civil Aviation Ministry.

The independent directors who met Nair were Vice Chairman and MD of Mahindra Group Anand Mahindra, former Chief of Air Staff Fali Homi Major, FICCI Secretary General Amit Mitra and Yusuffali M A, Managing Director of Dubai-based industrial house Emke Group, sources said.

However, they described the meeting as a "courtesy call".

Issues concerning Air India's financial position, debt situation and human resources are understood to have come up for discussion at the meeting which came days after Civil Aviation Minister Praful Patel said Air India may get RBI approval for its debt restructuring by November. Air India has a debt of an estimated Rs 18,000 crore.

To reduce its financial burden, Air India has sought recasting of its debt on the lines of Vijay Mallya-owned Kingfisher Airlines which recently got RBI approval for debt restructuring.

The airline has been working on a financial turnaround plan to enhance revenue and cut losses. The proposals include tapping of business opportunities by launching a feeder service, called 'India Hopper', with about 40 small aircraft by March next year.

Based on these proposals to tap business opportunities and cut costs, the government is likely to infuse Rs 1,200 crore as equity to help Air India meet its financial commitments, mostly repaying of loans and interests for aircraft acquisition.

With a renewed surge in air traffic Air India has improved its finances significantly in terms of revenue and yield. It has also enhanced savings on fuel by almost Rs 350 crore and returned 16 leased aircraft.