Rs 67,000 crore: The loss, debt facing Air India

Facing a massive cumulative loss and debt burden totalling about Rs 67,000 crore (Rs 670 billion), Air India hopes the government would take an expeditious decision to infuse more funds to boost its rapidly dwindling financial position.

What is worse is that the ailing national carrier would have to repay a whopping Rs 20,415 crore (Rs 204.15 billion) worth of loans before the end of this fiscal year. If it defaults, the amount would invite loan loss provisioning which the banks may oppose, official sources said.

A meeting of the Group of Ministers slated for tomorrow is expected to decide on moving the Cabinet Committee on Economic Affairs soon for additional equity infusion of Rs 1,200 crore (Rs 12 billion) and take a series of other steps to soar up the airline's financial position.

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Latest estimates show that the ailing carrier was facing a net cumulative loss of Rs 20,320 crore (Rs 203.20 billion) between April 2007 and March 2011.

Its debt burden stood at Rs 46,950 crore (Rs 469.50 billion) -- Rs 20,185 crore (Rs 201.85 billion) worth of aircraft loans, Rs 22,165 crore (Rs 221.65 billion) working capital loans and over-dues of Rs 4,600 crore (Rs 46 billion). Its cumulative loss and debt burden comes to a whopping Rs 67,270 crore (Rs 672.70 billion).

To overcome this financial rut, Air India is seeking an upfront equity infusion of Rs 6,600 crore (Rs 66 billion) from the government for immediate relief and another Rs 5,736 crore (Rs 57.36 billion) to fund cash deficits spread over ten years till FY 2021.

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As part of its turnaround and financial restructuring plans, it proposes to issue redeemable preference shares for over Rs 7,400 crore (Rs 74 billion) out of the Rs 22,165 crore working capital loans with eight per cent dividend. It also proposes steps to enable it repay over Rs 11,100 crore (Rs 111 billion) of loans at 11 per cent interest over a 15-year period.

Air India's financial restructuring plan also calls for another equity infusion of Rs 30,584 crore (Rs 305.84 billion) through funding of principal and interest repayments for guaranteed aircraft loans up to FY 2021, the sources said.

This, along with the upfront equity infusion and money to fund cash deficits, would take the total equity infusion till FY 2021 to Rs 49,920 crore (Rs 499.20 billion).

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Till now, government has injected Rs 2,000 crore (Rs 20 billion) in two tranches, raising its equity base to Rs 2,145 crore (Rs 21.45 billion).

Maintaining that the government was fully committed to help Air India, civil aviation secretary Nasim Zaidi recently said several initiatives -- ranging from equity support to clearance of various dues to be paid to it by the government, would soon be taken.

These initiatives "are being coordinated at a very high level. Government is very committed to supporting Air India and the problem will be sorted out in a time-bound manner," he had said.

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The national carrier has approached the government to recover Rs 1,222 crore (Rs 12.22 billion) dues towards operating VVIP and special flights over the last five years. During this period, it operated 47 VVIP flights for which five Boeing 747-400s were withdrawn from commercial services for a total of 313 days.

Though Air India has billed the government Rs 1,222 crore for exclusive use of these five planes for VVIP operations and evacuation flights, the government could give the airline Rs 802 crore (Rs 8.02 billion) now, the sources said.

Air India was earlier paid Rs 250 crore (Rs 2.50 billion) by the government as part of payment for this purpose.