Air India too big to fail, gets $1.5 billion bailout package
Air India aircrafts are seen parked on the tarmac of the international airport in Mumbai on April 29, 2011. Air India on April 28 sought a court order against striking pilots as a stoppage over pay entered a second day, grounding dozens of flights and causing widespread disruption for passengers.
The Indian government unveiled plans for a $1.5 billion bailout package for the country's beleaguered state-owned carrier, Air India, the Hindustan Times reports.
Too big to fail, apparently, Air India will use the cash to wipe out debts owed to vendors and fuel suppliers, the paper said. In March, the carrier copped to losses of around $3 billion since the government moved to merge the international operations of Air India with the domestic carrier, Indian Airlines, under a single brand.
The new bailout comes over and above $250 million that the government promised the carrier for this fiscal year, the paper said. Meanwhile, Air India will restructure approximately $10 billion in working capital and long-term loans, with the intention of reducing its annual interest payments, which now cost it around $750 million a year.
Apart from moving its own money (and debts) around, the airline will purportedly increase revenue by making better use of its aircraft — though how it plans to fill more seats hampered by its poor reputation remains unclear.
Among other measures to be taken is to revive the airline's hotel business and rid it off consultants. Air India currently employs hundreds of consultants at exorbitant salaries, according to HT.