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The big ticket largesse comes with riders

To turn around the fortunes of crawling public carrier Air India, the Centre, on Thursday approved Rs 30,000 crore towards its restructuring and assured induction of 27 Boeing 787 Dreamliner jets to its fleet in a fortnight, but deferred a decision on foreign airlines picking up stake in Indian carriers until next week.

“As part of the financial restructuring plan for Air India, the Centre will infuse a lot of money. About Rs 30,000 crore will be infused in Air India till 2020. But it will have a lot of checks at different levels,” Aviation Minister Ajit Singh said after the Union Cabinet cleared the financial restructuring plan for Air India.

Indian airlines have been battered by rising fuel costs, high taxes and fierce competition in a market where five of the six main operators are losing money.

Singh also expressed the hope that these measures will help the loss making Air India earn profit by 2020.

Air India has a total debt of Rs. 43,777 crore. It has accumulated a Rs. 20,320.86 crore loss over the last four years and currently pays an interest of Rs 2,400 crore a year to banks.

According to estimates, the state-owned carrier will save Rs. 1,000 crore a year as a result of the restructuring.

Singh said Air India, which had not been able to pay salaries to the employees for some time, would see better days with the airline getting Rs 6,750 crore in 2012 alone.
There is good news for Air India and the passengers. Air India and some other airlines are in trouble, Singh said.

According to the restructuring plan 7,000 Air India employees would be shifted to engineering section and 12,000 would be moved to the transport division.

“Restructuring of Air India is necessary. The government will not and cannot continue to spend public money on it. The government will not infuse public money in Air India indefinitely.

 The airline will have to come in line,” Singh said. On the much-awaited decision on foreign airlines acquiring stake in Indian carriers that would have allowed cash-strapped domestic airlines like Kingfisher to access funds more easily, was postponed until next week as the minister said some more clarifications were needed on the issue.