Modi govt readies another Air India bailout package, Jayant Sinha says talks at advanced stage

New Delhi: Discussions on a bailout package for embattled state-run carrier Air India are at an “advanced stage”, the country’s junior aviation minister Jayant Sinha said on Wednesday. The government has been working on a package for Air India after plans to sell a majority stake in the debt-laden airline failed this year due to a lack of interest from bidders.

“We are going through the government approval process,” Sinha told reporters, without giving details.

Air India, which has survived for years with help from taxpayers, has asked the government for Rs 2,121 crore in additional equity to pay the carrier’s bills to vendors.

Sinha earlier said that a $120 million capital injection for Air India was on the way, and the government is also working on a relief package for the airline industry.

Jet Airways, India’s largest full-service carrier, and Air India are struggling to stem losses in India, where competition is intense and fuel taxes are high.

The aviation ministry has proposed other measures to help the industry, including adding aviation turbine fuel to a nationwide goods and services tax, Sinha said.

Meanwhile, economic affairs secretary Subhash Chandra Garg said the government is working on restructuring Air India’s finances to ensure that the airline has “sustainable debt”.

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The debt burden of the national carrier, which is grappling with tough business conditions, is estimated to be more than Rs 50,000 crore.

“What government is doing in Air India is to restructure the finance of Air India in a way that Air India is there with a sustainable level of debt. Whatever is the excess unsustainable debt (it) will be taken out... Air India with sustainable debt will work as a viable entity,” Garg said.