Provision for equity infusion into AI may figure in budget

New Delhi, Feb 27 (PTI) Provision for the much-neededequity infusion into ailing Air India and a proposal toliberalise fund-raising capability of the Airports Authorityof India may figure in the 2011-12 budget to be presented inParliament tomorrow.

The two proposals, if accepted, would act as a bigrelief to both the public sector units which have been facingfinancial and liquidity crunch, sources said.

Air India is facing serious difficulties in meetingseveral of its liabilities.

It is confronted with an adverse cash-flow situationprimarily because of high fuel prices, rise in costs onaccount of interest payments on aircraft purchases,depreciation costs and wage bill, besides high costs ofleasing planes and maintenance.

Keeping this precarious situation in mind and the CivilAviation Ministry''s proposal for further infusion of funds,the government may provide another tranche of Rs 1,200 crorein the budget tomorrow, the sources said.

If granted, this would be the third tranche of equityinfusion, with the government already having given Rs 2,000crore to the airline in two tranches in 2010 and in Januarythis year.

Air India has incurred losses to the tune of Rs1,791.38 crore in the first quarter of 2010-11, apart from thelosses of Rs 5552.44 crore, Rs 5,548.26 crore and Rs 2,226.16crore respectively in 2009-10, 2008-09 and 2007-08.

Regarding the state-run airports body, which ismodernising several metro and non-metro airports across thecountry, the sources said the AAI has for long been pressingthe government to raise funds by issuing infrastructure bonds,a proposal that was rejected by the Finance Ministry over ayear ago.

The borrowing norms might be liberalised in the upcomingbudget to give the AAI enough flexibility to raise resourcesfrom the market, the sources said.

One of the prime reasons for AAI''s cash crunch is thecontinuing default by several airlines on payments for allservices at airports, including landing, parking andnavigation charges.

If the 2011-12 budget proposes to liberalise borrowingnorms, it would help AAI to implement plans to borrow Rs 900crore this year and Rs 800 crore next year to fund theupgradation of almost a dozen out of a total 35 non-metroairports. .