Debt-laden Air India knocked on the government's door yet again seeking funds to keep it afloat amid the ongoing bids to disinvest the national carrier, say news reports.
In the latest round, cash-strapped Air India has sought government nod to borrow Rs 2,400 crore from National Small Savings Fund (NSSF), a pool of small savings from households, to meet its working capital requirements, said a report in Mint.
As part of the fund search, Air India had reportedly put up a request at a meeting chaired by Civil Aviation Secretary Pradeep Singh Kharola on 14 May this year in which all the top executives of the agencies working under the Civil Aviation Ministry were present, the report said.
The airline is sitting on a debt pile of around Rs 58,000 crore, besides its accumulated losses has gone up to about 69,575.64 crore in the past decade.
Meanwhile, the Air India management reportedly sent a note to the aviation secretary, who was the former chairman of the airline, on Monday requesting immediate action on the request to borrow money from NSSF, said a report in The Time of India.
Due to its acute liquidity crunch, the airline is yet to pay the November salary to the employees, the report said.
"Ever since Aviation Minister HS Puri made a statement in the Parliament on 27 November 2019, that 'AI will shut down if not sold off,' everyone we owe money to has been asking for payment. We have reached a stage where it is becoming very difficult financially to continue. We need continued services/supplies as a functional airline, but people are now saying clear or reduce past dues first. We have requested the government to enable us to raise fresh loan of Rs 2,400 crore by giving us sovereign guarantee to be able to keep flying," the report said quoting people in the know of the development.
Govt backs out of bailout package
The government has not provided Air India the financial support of Rs 2,484 crore, which is the balance of the bailout package extended to it by the United Progressive Alliance (UPA) II in 2012, and this led to the national carrier looking for fresh funds, according to Business Today quoting officials of the airline.
According to the package, a part of a financial restructuring plan for Air India, the airline was to receive budgetary support of Rs 30,231 crore over a 10-year period ending March 2021, the report said.
Early this month, the national carrier reported its highest-ever annual loss in 2018-19 fiscal due to reasons including low fleet utilisation and high fuel prices.
On 5 December, Puri had told the Lok Sabha that Air India posted a provisional net loss of Rs 8,556.35 crore in 2018-19. It had a net loss of Rs 5,348.18 crore in the previous year.
Puri said that the national carrier received an equity infusion of Rs 30,520.21 crore from financial year 2011-12 till date.
The major components of the financial package for 2018-19 included a cash support of Rs 3,975 crore to Air India, inclusive of Rs 1,630 crore already infused in the airline in 2018-19.
Another component was for providing a "government guarantee of Rs 7,600 crore, inclusive of Rs 3,000 crore already provided to Air India in 2018-19, to raise new debt for payment of stretched liabilities".
In October this year, there were reports that the government was planning to invite preliminary bids for 100 percent stake sale in Air India in November and already some entities had expressed interest in the national carrier.
In early October, the Air India management had held a meeting with its trade unions on the proposed privatisation of the loss-making carrier.
The majority of its unions are opposed to the move, fearing job losses.
On 28 November, Puri had said that Air India would have to be closed down if not privatised and reiterated that the government was committed to secure a favourable deal for all employees of the state-owned carrier.
In November, Air India had said that it would give one-year job protection to its employees amid efforts are underway to privatise the loss-making national carrier.
Over 11,000 employees of the debt-laden Air India will be offered employment guarantee for a period of one year as employee issues of state-run companies are of concern to buyers in the wake of high employee costs and low productivity.
" With PTI inputs