Air India is in urgent requirement of funds and the central government, which has failed to find a buyer for it, now faces the task of providing for the airline’s existence until it gets “sweetened enough” to be bought by eligible buyers, hopefully after the general elections of 2019.
Air India, through the civil aviation ministry has sent an SOS of Rs 500 crore, so as to avoid default on repayment of its loans. This is in addition to the Rs 1,500 crore it is raising as short-term loan from Bank of Baroda, which is barely enough to meet its international liabilities.
The development comes just days after certain senior government officials began talking about pumping additional Rs 30,000 crore as a second bailout package for the airline. The first bailout package, announced by the previous regime, has infused Rs 27,195 crore in the airline till fiscal 2018, but without much results to show. However, soon there was a U-turn as government does not want to send out a negative signal in the election year as the money can instead be used for several cash-starved social sectors.
However, even as practicality of not pumping more funds in Air India remains, the government has to be sensible enough that the airline does not go further down the drain as fund crunch may sooner than later may lead to non-maintainability of aircraft and finally its grounding, which will make it further difficult to be sold.