Saturday, 26 March 2011

Air India gets extension to pay oil dues

Mr Arvind Jadhav, Chairman and Managing Director, Air India

Air India got a breather from the public sector oil retailing companies as the national carrier received a month's extension to repay their dues worth Rs 2,400 crore.

A Committee of Secretaries headed by the Cabinet Secretary, Mr K.M. Chandrasekhar, decided to defer the March 29 deadline by another month, at a meeting held on Saturday.

Currently, the cash-strapped national carrier pays Rs 13.5 crore a day for the jet fuel it buys from the oil companies. But as a result of the rising crude oil prices, oil marketing companies have sought a hike of Rs 5 crore a day, taking the cost up to Rs 18.5 crore a day.

Official sources said the airline, while seeking an extension of the deadline, has also sought a discount on payments, similar to what the private airlines on cash-and-carry mode are receiving from the oil retailers.

Air India Chairman and Managing Director, Mr Arvind Jadhav, who made a presentation at the meeting, made a case for getting discounts for paying cash upfront. The Committee of Secretaries is understood to have asked the oil companies to work out financial impact of such a discount.

The meeting also discussed the issue of payment of dues of about Rs 450 crore by arms of the Government to Air India. The Civil Aviation Secretary, Mr Nasim Zaidi, Air India Chairman and Managing Director, Mr Arvind Jadhav, and officials from the Ministries of Petroleum, Defence and External Affairs were also present at the meeting.

Air India has a debt burden of Rs 40,000 crore. It has incurred a cumulative loss of over Rs 13,326.86 crore, since its merger with Indian Airlines in 2007, at the close of financial year 2009-2010.

In the latest Budget, the Government has made a provision of Rs 1,200 crore to the airline as additional equity infusion. This is the third tranche of equity for Air India, which has received Rs 800 crore and Rs 1,200 crore respectively in the 2009-10 and 2010-11 budgets.

(Source from: the Hindu)

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