Air India to get Rs.6,500 crore of fresh equity

New Delhi : Finance Minister Arun Jaitley Thursday proposed infusion of an additional equity of Rs.6,500 crore in the cash-strapped national passenger carrier Air India for the current fiscal.

“Budgetary support of Rs.6,500.00 crore has been earmarked for equity infusion in Air India Limited,” said the expenditure budget document.

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The national passenger carrier, which has an accumulated debt of around Rs.40,000 crore and losses estimated to be around Rs.6,000 crore for 2013-14, was given Rs.5,000 crore in the previous budget.

The budgetary support is a part of a turnaround and a financial restructuring plan worth Rs.30,000 which was passed in April, 2012.

The turnaround plan worth Rs.30,000 crore of equity infusion is expected to be completed over a period nine-years starting 2012-13.

Apart from Rs.30,000 crore of equity infusion, the turn around plan envisions Air India getting Rs.7,400 crore by issuing government-backed non-convertible debentures (NCDs) to its lenders, like financial institutions, banks, LIC and EPFO.

Its operational performance is also expected to improve with the induction of 27 Boeing 787 Dreamliners and a reduced expenditure burden as it hives off its MRO (Maintenance, Repair and Overhaul) and engineering services as two wholly-owned subsidiaries.

Earlier the airline reported to have turned EBITDA (Earnings Before Interest, Depreciation, Tax and Amortization) positive by the tune of Rs 48.75 crore between April and December 2012.