Government to contemplate capital infusion for cash strapped Air India: Patel

New Delhi July 14 (ANI): Union Civil Aviation Minister Praful Patel on Tuesday said the government is contemplating capital infusion by way of equity and soft loans for the cash-strapped Air India, which has deferred future aircraft delivery owing to losses of Rs 7,200 crore.

Replying to a calling attention motion on Air India, moved by BJP MP Prakash Javadekar in Rajya Sabha today, Patel said, the Air India has adopted various measures to improve its financial position, and an equity infusion and soft loan by the Union Government would soften the airline's adverse financial situation.

Air India has been forced to defer payment of salary to its employees for the month of June. For the fiscal 2008-09it is estimated to have incurred a loss of about Rs 5,000 crore in a difficult global aviation market, Patel informed members.

Patel said to improve its financial condition the air India is planning to reschedule or cancel aircraft delivery and, nationalization of routes, and also reduce manpower and also incentives to employees.

Air India has placed orders for a total of 111 aircraft from Boeing and Airbus for its fleet replacement and expansion programme, and it was planning to return its leased planes at the earliest. The nationalization of routes would help to cut losses on traditionally loss making ones has been done, Patel added.

Patel said Air India also incurred huge cost for operating non-economic flights in national interest like flights to the Northeast, Andaman and Nicobar Islands, transportation of army troops and Haj pilgrims, disaster relief and other unprofitable but necessary operations.

Patel informed the house that all agreements on technical and operational matters were being reviewed so as to align these to reflect the present market conditions. A turnaround committee, comprising representatives of senior management and the unions, has been set up to look at all areas of cost reduction, including closure of all offline offices and reduction of employees at foreign stations, Patel said. (ANI)