Air India seeks Rs 2,100 cr from govt to meet its operational costs

The stake sale proposal of Air India showed muted response from the investors last month.

Update: 2018-07-11 07:18 GMT
The privatisation of loss-making Air India has hit a roadblock at the starting line-up itself.

Mumbai: After no bidders put in their Expression of Interest for the strategic disinvestment of Air India Ltd last month, the debt-ridden national carrier has requested the government to provide a short-term capital of Rs 2100 crore to meet the airline's immediate operational costs, as told by senior officials of Air India Ltd to Mint.

“While the airline needs about Rs 2,100 crore to address its immediate working capital and other operational requirements, it could need a larger amount in the longer term to lease planes and expand operations to compete with other domestic and international airlines,” as told by the official on anonymity in the report.

On account of competition from low fare airlines the share of Air India in domestic market has fallen below 10 per cent. Out of the aircrafts ordered from Indian airlines, which is well over 1,000, low-fare airlines account for a larger share.

The proposed infusion by the airline would adhere to its short-term capital requirements and for the expansion and leasing of aircrafts Air India will need to move towards the market to raise the required funds.

The stake sale proposal of Air India showed muted response from the investors and now the government mulls to continue with the disinvestment of the debt-ridden national carrier by revising the bidding norms, which is likely to be finalised soon.

The civil aviation ministry is gathering details from the transaction advisor to understand the reasons on the failure to attract bidders, this would help in understanding the factors responsible for stopping of the investors from bidding for Air India.

(With Inputs from Agencies)

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