Modi govt pumped in Rs 16,800 cr into debt-ridden Air India since Aug 2014: report
The Narendra Modi-led government’s resolve to revive the fortunes of Air India has seen the Centre pump in Rs 16,800 crore into the loss-making state-owned carrier since it came to power in May 2014, a media report said today.
Business Standard, citing documents it reviewed, said that the Modi administration pumped in Rs 16822 crore between August 2014 and March 2017 into Air India from the taxpayer’s money.
According to the report, the first tranche of Rs 2000 crore was received by Air India in August 2014. Subsequently, six more payments totaling Rs 1947 crore were made from September 2014 to February 2015.
Between April to November 2015, seven payments amounting to Rs 3300 crore were made. Besides the capital infusion by the government, the airline, in its bid to reduce the interest burden in its balance sheets, had also requested the government to treat interest reimbursements on its aircraft loans as revenue grants rather than equity support.
In March 2016, the government pumped in another tranche of Rs 4318 crore into the airline. These payments were in the form of equity infusions with Air India issuing over 4 billion shares to the government and were part of the national airline’s Turnaround Plan (TAP) and Financial Restructuring Plan (FRP).
A year later in March 2017, another Rs 5257 crore was given to Air India in the form of equity infusions. Being a government owned company; over 5 billion shares were allotted to the President of India as part of the deal, the report said.
Such infusions by the government to help the national carrier survive, however, are not new. In 2013-14, the erstwhile Manmohan Singh-led United Progressive Alliance (UPA) government had pumped Rs 6000 crore into the airline in a similar manner. This was Rs 1,000 crore more than the approved amount.
Meanwhile, the huge capital that the government has been putting into Air India appear to have had little impact on the debt condition of the national carrier.
The airline’s CEO Ashwani Lohani in an open letter on March 15, 2017 had blamed mounting debt as the cause of Air India’s ills. Lohani had noted, “Of course gross mismanagement at the senior management levels of the company played its part in the rapid downward slide too, but isn't appointing senior management functionaries the function of the governments? Yet the mountain of debt that we acquired appears insurmountable and is at the root of all the problems that manifest as symptoms to all and sundry.”
The airline, which began stating its overall debt position in its annual accounts only since 2014-15, has an overall debt of Rs 52460 crore. Its net worth is negative and its aircraft project loans have hovered around the same mark of over Rs 22000 crore since the last five years. Other indicators too are not very impressive.
It’s passenger load factor (PLF) and overall revenues have improved marginally over the years. Losses in 2014-15 stood at Rs 5860 crore. The only profit (of around Rs 15 crore) it ever made in years was in the month of December in 2014 when aviation turbine fuel prices were at an all-time low.
Meanwhile, Air India has trimmed its workforce over the years. In 2011, it had more than 26000 employees on its rolls including over 5000 Schedule Castes (SCs) and over 1400 Other Backward Castes (OBCs). In 2014-15, its employee strength was just over 21000. The number of SCs and OBCs employed by Air India fell by 26 per cent in line with the overall pruning of the workforce.