In a major relief for Air India, Petroleum Ministry today decided to grant two to three months credit to the troubled airline for jet fuel instead of making
daily payments. The national carrier had been put on cash-and-carry mode
by public sector oil companies since last December as it owes
more than Rs 2,000 crore to them.
daily payments. The national carrier had been put on cash-and-carry mode
by public sector oil companies since last December as it owes
more than Rs 2,000 crore to them.
Air India has been paying Rs 16.5 crore a day for lifting aviation turbine fuel (ATF) for its day-to-day operations. The decision on providing fuel credit was taken by a Group of Ministers, headed by Finance Minister Pranab Mukherjee, which also reviewed the latest financial and operational performance of the ailing carrier, Civil Aviation Minister Vayalar Ravi said.
"Instead of cash and carry, Air India will from now on make payments on the basis of this credit limit of two to three months," Ravi said, adding, "So, the tension of making daily payments is now over". The meeting was also attended by Petroleum Minister S Jaipal Reddy, Home Minister P Chidambaram, Deputy Chairman of Planning Commission Montek Singh Ahluwalia and Civil Aviation Secretary S Nasim Zaidi.
It was the first meeting of the GoM which was attended by the newly appointed CMD of Air India Rohit Nandan. The cash-strapped and debt-ridden national carrier has outstanding loans and dues of Rs 67,520 crore, of which Rs 21,200 is working capital loan, Rs 22,000 crore is long-term loan on fleet acquisition, Rs 4,600 is vendor dues and an accumulated loss of Rs 20,320 crore.
"A sub-committee of the Finance Ministry will submit a report on the Turnaround and Financial Restructuring Plan next month," the Minister said, adding that the GoM will meet again in mid-September. "All attempts to strenghthen Air India with some financial support to improve its cash flow will be made by the government," Ravi said.
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