AIR INDIA is gearing up...
EQUITY BOOSTER DOSE FOR AIR INDIA
New Delhi: The Cabinet Committee on Economic Affairs (CCEA) today approved an equity infusion of Rs 1,200 crore in Air India.
The government has so far approved Rs 2,000 crore as equity investment during 2009-10 and 2010-11. It has also approved and released a sum of Rs 500 crore as equity investment during the current financial year.
Air India is in a severe financial crunch, and the equity induction will ease the cash flow situation and prevent it from borrowing from the markets at a high cost.
The national carrier’s present paid-up equity capital is not sufficient for a company of its size. The company is struggling to address costly legacy assets, a weakening revenue stream and a high cost structure that have resulted in rising liabilities.
A group of ministers (GoM) in a meeting on February 3, 2010 decided that the recommendations for revival should be placed before the cabinet. These recommendations include rationalisation of wage costs and legacy union agreements and setting up of support businesses for MRO (maintenance, repair and operations), ground handling and cargo.
05/08/11 The Telegraph