New Delhi: As Jet Airways looks for life support, there is another airline that is reeling under massive amounts of debt and does not have the resources to pay it off. It is state-owned Air India. According to sources, the national carrier is staring at debt repayments totalling Rs 9,000 crores in the current financial year but does not have the money to pay them off. The only way Air India can survive this situation is if it gets a bailout package from the government. However, that is unlikely to happen before a new government takes over.
Principal payments of loans due this year
“Principal payments of a few loans are due this year but the airline does not have money to repay them,” said a source aware of the development. “Either Air India defaults or prunes its operations and thus costs to repay these loans. Representations have been made to the finance ministry on the issue.”
The matter has been escalated by the Ministry of Civil Aviation (MoCA) to the Finance Ministry, sources said.
Air India losing Rs 6 crore everyday
After Pakistan shut down its airspace in the wake of border tensions, Air India has been losing Rs 6 crore daily on its international flight to the United States and Europe. The losses have forced the national carrier to suspend flights on a few international flights.
No further fund infusions
According to a source in the Ministry of Civil Aviation, the government had already ruled out any further fund infusions at the time it took over the airline’s debt. “The government had taken over Air India’s debt and made it clear that there would not be any more equity funding,” said the source. However, the Finance Ministry is aware of the matter and the government will have to help because it is a state-run airline.
However, the airline’s future depends on the election outcome. If the ruling dispensation comes back to power, it would want to disinvest fully instead of debt servicing.
Air India has a debt of more than Rs 54,000 crore on its books. The government had last year tried to sell 76 percent stake in the airline but the offer failed to garner interest.