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Centre To Release Rs 705 Cr To Air India

New Delhi, Aug 31: After an ad hoc payment of Rs 500 crore to partly clear its dues to Air India, Government would release another tranche of Rs 705 crore to the national carrier very
PTI August 31, 2011 18:32 IST
PTI

New Delhi, Aug 31: After an ad hoc payment of Rs 500 crore to partly clear its dues to Air India, Government would release another tranche of Rs 705 crore to the national carrier very soon, official sources said today. 

Government, which had made a provision of Rs 705 crore in the Supplementary Demands passed by Parliament this Monsoon session, would very soon release the amount to the cash-strapped carrier, they said.

An amount of Rs 500 crore has already been paid on ad hoc basis on account of VVIP travel and evacuation flights carried out by the airline.

Air India estimates that about Rs 613 crore are owed to it by various Ministries, government departments and agencies, apart from the cost of maintenance of aircraft taken out of the operational fleet for VVIP operations. 

The national carrier was experiencing a severe financial crisis owing to massive fixed costs like high expenditure on insurance, interest on working capital, aircraft loan and leasing of aircraft.

Due to liquidity crisis, it has also not been able to make timely payment of salaries to its employees.  An amount of Rs 373 crore has already been raised by the government from some ministries and departments on account of operating chartered VVIP flights, the sources said.

The airline, which is burdened by an accumulated loss of Rs 20,320 crore, has outstanding loans and dues of Rs 67,520 crore—of which Rs 21,200 is working capital loan, Rs 22,000 crore is the long-term loan on fleet acquisition and Rs 4,600 vendor dues, latest official figures showed. PTI