Air India needs a bailout of nearly US$620 million to keep flying, a minister said in remarks published yesterday, adding that he was certain the loss-making airline would survive.
The flagship airline, which had posted a US$1.03 billion loss for the fiscal year ended March 31, and other Indian carriers have been hit by overcapacity in the industry, as well as a sharp drop in passengers due to the economic slowdown.
“The airline will survive. Every time it was in trouble the problems were rolled over, and we will roll over this time also,” Civil Aviation Minister Praful Patel told India’s Business Standard newspaper.
Patel said he did not want the government to have to bail out the state-run carrier but added that “we have to do certain things as shareholders” of the airline.
“Air India should be sold, but I’ve been asked to keep it going,” he told the newspaper.
“The airline needs a 30 billion rupee [US$618.6 million] equity infusion and the conversion of high-cost debt to low-cost debt to keep it going,” Patel added.
The airline has been seeking financial assistance from the government together with soft loans to remain afloat.
A decision by Patel to allow more private carriers to fly in India’s skies has undercut the airline’s competitive position and has led to criticism from trade unions that he has endangered the airline’s survival.
Patel said his decision was to promote the overall growth of the aviation industry.
“Do not see me as a minister for Air India,” he told the newspaper.
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