In a revised bailout proposal, the national carrier has asked for an equity infusion of around Rs 5,000 crore and a soft loan of Rs 7,000 crore. In addition, it has also demanded Rs 2,000 crore as grant from the government.
The proposal, finalised by Air India a week ago and submitted to the civil aviation ministry recently, was discussed by the ministry.
Last year, the carrier had asked for a Rs 2,750 crore soft loan and an equity infusion of Rs 1,231 crore. The finance ministry and department of public enterprises had then asked the ministry to draw up a plan to trim down holding firm National Aviation Company of India Limited’s operations and prepare a viable model for the next five years.
“This is an unprecedented crisis,” a government official told The Indian Express. “There has to be drastic route rationalisation and cost cutting. Allowances and perks of Air India employees will be re-examined, which may result in an across-the-board reduction in benefits.”
Air India has over 33,000 employees on its rolls, with another 20,000 as contractual labour. Its annual wage bill, as per latest records, stood at Rs 4,000 crore. There are a host of benefits for its employees, which includes complementary travel on Air India’s business class. “It is estimated that 30 per cent of Air India flights are filled with its employees,” the official claimed.
As against projected losses of Rs 4,000 crore in financial year 2008-09, the revised estimates for losses has gone up by 25 per cent, hovering around Rs 5,000 crore.
A substantial gap between its income and expenditure is evident from the fact that Air India’s monthly expenditure stands at Rs 1,750 crore while its budgeted monthly income from all sources is Rs 1,300 crore, of which actual realisation is Rs 950 crore — leaving a gaping deficit of Rs 800 crore per month.
The company is getting hammered from all sides as cost of its acquisition of 144 aircraft has shot up from Rs 44,000 crore to around Rs 50,000 crore on account of cost overruns and currency fluctuations.
Not only that, the company is facing renewed working capital troubles as it has fully utilised its overdraft limit of Rs 16,000 crore, which was raised from Rs 15,000 crore in the last board meeting.
High expenditure, low income
Rs 1,750 crore - Air India’s monthly expenditure
Rs 1,300 crore - Budgeted monthly income from all sources
Rs 950 crore - Actual realisation
Rs 800 crore - The deficit per month
FALL DOWN OF NATIONAL CARRIER AIRINDIA IS ONLY PRAFULL PATELS LONG TERM STRETEGY....HE IS THE ONLY RESPONSIBALE FOR MERGER...TODAY AIRINDIAS MANAGMENT IS RUNNING BY INDIANAIRLINES MANAGMENT THEY ARE NOT UPTO STANDARD FOR INTERNATINAL AIRLINES MANAGMENT...ALL ORIGNAL AIRINDIAN ARE SIDE LINED BY IC MANAGMENT TO TAKE OVER THIS COMPNY..
Now that private airlines registered in India are flying abroad, there are plenty of flag carriers around such that the government does not have to invest in aviation for the prestige.It would be wise to sell off the company and use the money to build airports or bullet trains between the cities. Even better would be to invest the money in expanding higher education so our students don't have to use planes to travel abroad.
14k crore rupees, Govt should spend tax payers money for this bail out. Indian politicians and bureaucrats feel tax payers money as their personal money. They just play with the money.
Only Mr pruful Patel,Independent Minister of Civil Aviation, who is having day to day control on Air India and has made money in ordering Big fleet for Air india and promting Kingfisher and Jet Airways is resposible for all these reds. DGCA is also resposible for selling important routes againts cash or kind......A enquiry under high court judge should be conducted under supervison of our Honest PM.
This was obvious to have happened to Air India. I am not surprised. And I strongly beleive they have themselves to blame for it.What Air India should realise it that ..they are into a market which is no more monopolised by them..there are other efficient and visionary companies who are competing them.I dont think govt. should bail them out, Air India should use its own resources to come out of the crisis and that will be the acid test for its integrity and commitment.
Give this to Lalu..he will surely pull out Air India out of the red! He has proved beyond doubt his ability to do so in railways.....which nobody could ever do in the history! Jai ho Lalujee!
It is shameful that employees are getting salary of 2-9 lakhs per month when the company bleeds.shut the airline and restructure it to be more efficient and cost effective
If Air India closes down, how can Praful Patel make his millions by ordering new aircraft. Has that stupid minister taken any interest so far in improving Air India ? He is interested only in other carriers and least bothered about the national carrier, whom he has milked enough already. He is the main reason for the national airlines downfall.
Total in agreement with you .The whole aviation dept is run by incompetent employees
Gvt. has no business to do in aviation industry.press Exit button and save tax payer's money.Gvt. should concentrate on building better airports
Air India must be closed down and all the employees sacked. The govt can then save 14,000 crores instead of spending on this junk of an organisation.
Just sell it off to someone who can make it profitable.If that is not possible, let it just perish.15000 Crores? Why? whats the point. It is not a social responsibilty like railways. In any case, railways is profitable too.Let other players pick its passengers.Why waste taxpayer's money?