Govt not to fund AI, IA restructuring

MUMBAI, June 10: The Minister of Civil Aviation Ananth Kumar has given a three-week deadline to the managing directors of both the national ...

MUMBAI, June 10: The Minister of Civil Aviation Ananth Kumar has given a three-week deadline to the managing directors of both the national carrier, Indian Airlines and Air India to come forward with a restructuring package. At the same time, the board of directors of the airlines have been told not to expect any fund infusion from the government of India in future.

The deadline was given to the managing directors, P C Sen and M Mascerenhas in the board meeting held in New Delhi recently. The minister has asked Air India to take 8220;any steps to raise funds8221; but at the same time warned not to come to the Union government with a begging bowl.

The minister8217;s outburst comes at a time when a committee headed by the former petroleum secretary, Vijay Kelkar is all set to give its recommendations to the Government of India on Air India8217;s restructuring. The airline was expecting a fund infusion of Rs 2,000 crore from the Government under the Kelkar committee recommendations.

As per an earlier recommendation onIndian Airlines, the privatisation of the domestic airline has been set in motion and a similar fate now awaits the loss-making Air India.

The minister was particularly alarmed over the rising losses of Air India. Though Indian Airlines showed some signs of revival in the last fiscal due to the death of other private airlines, Air India is entering into an financial mess.

For the fourth successive financial year, Air India would be recording losses which is expected to cross over Rs 100 crore for the fiscal 1998-99. Air India has already taken a working capital loan of Rs 1,000 crore and pays Rs 110 crore as interest charges. Besides, the airline has taken external commercial loans of Rs 4,000 crore to fund its recently-acquired 747-400s.

According to sources, both the managing directors, after their return from an IATA meeting in Canada would be busy preparing the blueprint of the revival plan.

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The minister also indicated to the top officials of Indian Airlines that the the private airline plan bythe Tatas is not in the priority list of the government. With this, the government has made it clear that it is interested in giving protection to the present domestic carriers, sources add.

The minister8217;s comments that Air India will not get any fund infusion is expected to hit the airline hard as its fund requirements for the current financial is as high as Rs 341 crore.