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Air India needs to survive till it is sold, says Lohani as airline runs almost out of funds

The airline had on Monday asked the govt for an immediate sovereign guarantee to raise Rs 2,400 cr loan.

, TNN|
Updated: Dec 15, 2019, 11.18 AM IST
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Lohani
Ashwani Lohani (TOI photo)
(This story originally appeared in on Dec 14, 2019)
MUMBAI: Cash-strapped Air India is now finding it hard to continue operations in the absence of any equity infusion from the government so far this fiscal. The divestment-bound airline's CMD Ashwani Lohani said in a late Saturday night Facebook post: "Air India needs to survive till it is sold. I wonder why is it so difficult for this appreciation to sink in..."

Air India management had on Monday sent an urgent SOS to the government, seeking immediate sovereign guarantee for raising Rs 2,400 crore as fresh loan to somehow keep flying till outcome of the second divestment process is known. Given the government's tight fiscal position that makes equity infusion difficult, AI was asked to raise fresh loans. However there has been no response to that so far and AI is finding it difficult to continue operations like this.


Lohani's plain-speaking Facebook post added: "...in this environment of disinvestment, expecting a radical improvement bordering on a turnaround is an impractical thought. That output can be given sans inputs is a grossly impractical thought. Air Indians are indeed putting in their best even at this critical juncture and that is very very appreciable."

Sources say Air India has a chance to be sold only if it is flying till the change in ownership takes place. The grounded Jet Airways, for instance, did not get any solid buyer and its slots and flying rights were given to other Indian carriers.

Air India has a total debt burden of close to Rs 74,000 crore - that includes nearly Rs 60,000 crore of aircraft and working capital debt and Rs 14,000 crore of net current liabilities or payables. A special purpose vehicle, AI Asset Holding Ltd, has taken on Rs 29,464 crore of the airline's debt along with some assets.

"Of the remaining debt, we are finding it hard to do debt servicing of close to Rs 225 crore per month. That is the shortfall between our expenses and income," said sources.

The expression of interest (EoI) for AI sale is yet to be issued.

The government is sweetening the deal by attaching a least possible debt tag - limited to aircraft loans only that the new buyer will anyway take and no working capital debt - for the sale.

On its part, the government is walking a financial tightrope and has not been able to been any equity to Air India this fiscal - apart from taking away Rs 29,464 crore of the airline's debt and relieving it from servicing of that significant portion of debt.

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