Take the pledge to vote

For a better tommorow#AajSawaroApnaKal
  • I agree to receive emails from News18

  • I promise to vote in this year's elections no matter what the odds are.
  • Please check above checkbox.

    SUBMIT

Thank you for
taking the pledge

Vote responsibly as each vote counts
and makes a diffrence

Disclaimer:

Issued in public interest by HDFC Life. HDFC Life Insurance Company Limited (Formerly HDFC Standard Life Insurance Company Limited) (“HDFC Life”). CIN: L65110MH2000PLC128245, IRDAI Reg. No. 101 . The name/letters "HDFC" in the name/logo of the company belongs to Housing Development Finance Corporation Limited ("HDFC Limited") and is used by HDFC Life under an agreement entered into with HDFC Limited. ARN EU/04/19/13618
LIVE TV DownloadNews18 App
News18 English
News18 » Business
2-min read

Air India Grappling With Unsustainable Debt, Says Suresh Prabhu

Loss-making Air India is estimated to have a debt burden of more than Rs 48,000 crore and the government's efforts for strategic disinvestment of the carrier failed in May.

PTI

Updated:August 22, 2018, 7:56 PM IST
facebookTwitter Pocket whatsapp
Air India Grappling With Unsustainable Debt, Says Suresh Prabhu
File photo of Commerce Minister Suresh Prabhu.

New Delhi: As the government works on ways to turnaround Air India, Civil Aviation Minister Suresh Prabhu has said that the national carrier has "unsustainable debt" and legacy issues need to be dealt with.

Loss-making Air India is estimated to have a debt burden of more than Rs 48,000 crore and the government's efforts for strategic disinvestment of the carrier failed in May.

"Air India is very clearly a legacy issue. Air India's debt is unsustainable. Forget Air India, nobody can handle that debt. For any airline to service that debt is not possible," Prabhu told PTI in an interview.

The best way is to look at how to deal with the legacy issue, he added.

Air India has been making losses since the merger with Indian Airlines in 2007.

As per its audited accounts, the airline's accumulative losses stood at Rs 47,145.62 crore in financial year 2016-17.

High interest burden, increase in competition, high airport user charges, adverse impact of exchange rate variation and liberalised bilaterals to foreign carriers leading to excess capacity in the market are among the major reasons for the losses, according to the Civil Aviation Ministry.

A revival strategy is now being worked out as the government aims to make the airline "competitive" before making a fresh push for disinvestment.

On Tuesday, a senior Finance Ministry official said the government was looking at transferring Air India's non-core assets and "unsustainable debt" to a special purpose vehicle as part of measures to revive the national carrier.

The airline is staying afloat on a bailout package extended by the previous UPA regime in 2012.

In the current financial year, the airline has received an equity infusion of Rs 650 crore up to June. A Turnaround Plan (TAP) and a Financial Restructuring Plan (FRP) were approved for Air India in 2012.

Last month, the government sought Parliament's nod for Rs 980 crore as supplementary grants for equity infusion into the airline.

Earlier this month, the ministry told the Rajya Sabha that the government remains committed to the disinvestment of Air India but has no plan to exit the national carrier altogether.

About the situation of domestic carriers, Prabhu said that whenever the fuel prices go up, the airlines get badly affected because it is a variable cost and cannot be absorbed into business model immediately.

"Now, we will have to work on it. Not only India but globally. Some of the global airlines are facing serious problems," he said during the interview.

Get the best of News18 delivered to your inbox - subscribe to News18 Daybreak. Follow News18.com on Twitter, Instagram, Facebook, Telegram, TikTok and on YouTube, and stay in the know with what's happening in the world around you – in real time.

| Edited by: Padmaja Venkataraman
Read full article
Next Story
Next Story

facebookTwitter Pocket whatsapp
Most Active
Company Price Change %Gain
Yes Bank 56.25 0.45
SBI 316.70 -1.03
Indiabulls Hsg 258.95 -4.96
Maruti Suzuki 6,994.75 1.57
Reliance 1,572.60 1.14
Company Price Change %Gain
Yes Bank 56.20 0.36
Indiabulls Hsg 259.00 -4.92
SBI 316.75 -0.95
RBL Bank 334.95 -1.14
Reliance 1,572.55 1.13
Top Gainers
Company Price Change %Gain
BPCL 499.65 2.28
HDFC 2,311.40 2.06
Adani Ports 373.60 2.03
Axis Bank 732.00 2.01
JSW Steel 258.85 1.87
Company Price Change %Gain
HDFC 2,310.60 2.06
Axis Bank 731.95 2.01
Maruti Suzuki 6,997.25 1.68
Reliance 1,572.55 1.13
Power Grid Corp 188.30 0.94
Top Losers
Company Price Change %Gain
TCS 2,060.45 -2.97
Cipla 447.90 -1.66
HCL Tech 552.05 -1.47
Zee Entertain 284.15 -1.23
Larsen 1,276.00 -1.15
Company Price Change %Gain
TCS 2,060.70 -2.93
TML-D 66.50 -2.06
HCL Tech 551.60 -1.54
Larsen 1,276.90 -1.04
IndusInd Bank 1,449.00 -1.01

Live TV

Countdown To Elections Results
To Assembly Elections 2018 Results