By IANS,
New Delhi : National carrier Air India, struggling to stay afloat after accumulating losses worth $1.5 billion, can soon expect a fresh lease of life with Prime Minister Manmohan Singh positively disposed for fresh government equity into the carrier.
The indication came after Civil Aviation Minister Praful Patel briefed the prime minister here Saturday about the precarious financial position of the carrier and the proposed reconstitution of its board.
“The prime minister was supportive of fresh equity in Air India,” an official spokesperson for the civil aviation ministry said after the hour-long meeting at South Block here.
“He was also briefed about the constitution of a new Air India board. The minister will also make a detailed presentation to the cabinet next Thursday,” the spokesperson told IANS.
“An early decision can be expected soon.”
According to officials, the quantum of equity will depend on the view the government takes on the recommendations by the ministry as also a study by consultancy SBI Caps on the financial turnaround.
Air India had been seeking fresh equity of about Rs.2,500 crore ($500 million) and a five-year soft loan of Rs.10,000 crore ($2 billion) to mainly fund its ambitious aircraft acquisition plan.
The meeting at South Block came a day after Arvind Jadhav, chairman and managing director of National Aviation Co of India, which owns Air India, briefed the media on a proposed turnaround plan.
“Air India will have to change the way it does business. We will do it. Our top priority is execution and accountability,” Jadhav said while releasing the turnaround plan over next 36 months.
As part of the revival plan, Air India has Air India’s proposed to launch low-cost domestic services, on the lines of Air India Express on overseas routes.
The airline proposes this new initiative by the middle of next month with 27 daily flights and eventually increase it to 75 flights later, Jadhav had told reporters Friday.
“We can start a maintenance, repair and overhaul unit. At present, our aircraft go abroad for checks. If we handle it ourselves, we can generate a business of Rs.4,000 crore ($750 million,” he said.
The airline will also invest in the cargo business, he said. “If our cargo operations are handled well, it would earn Rs.3,000 crore ($$650 million.”