New Delhi: Faced with Rs 40,000 crore debt burden, Air India has urged the government to soon clear some of its dues on account of VVIP and evacuation flights to enable it disburse salaries to its staff this month.


While the government has already paid Rs 250 crore to the ailing national carrier for carrying out VVIP duties and flights to evacuate Indians from Libya and Yemen, officials said another Rs 173 crore was expected soon.

They said some banks have also been approached to help Air India get rid of the "real cash crunch" and pay its staff salaries.

Government has made it clear that it attached "utmost importance to the credible revival of Air India", with Prime Minister Manmohan Singh saying he would ask Finance Minister Pranab Mukherjee to take "expeditious decisions" to revamp the ailing carrier.

It is expected that the government would take a decision to infuse the third tranche of equity of Rs 1,200 crores soon. So far, it has injected Rs 1,200 crores and Rs 800 crores in two tranches in 2009-10, raising the airline's equity base to Rs 2,145 crores.

Government has acknowledged that Air India was "passing through a difficult phase for the last few years", an official spokesperson said on Friday.

Soon after the merger of Indian Airlines and Air India, the global economy went through a severe recession and jet fuel price too hit an all time high. A highly competitive aviation market made an early recovery all the more difficult. All these factors resulted into losses during the last few years.

The government has also asked the airline to prepare 8 to 10-year-plan of resource generation to revamp itself by fully implementing the Turnaround programme.

According to the latest revival plan prepared by the SBICAPs, the airline would require an equity support of Rs 43,255 crores over next 10 years. Of this, Rs 8,372 crores would be required in 2011-12, Rs 6,600 crores to meet immediate requirements and Rs 1,772 crores to pay back aircraft loans.

The government was also considering early operationalization of the proposed subsidiaries for ground handling and MRO (Maintenance, Repair and Overhaul) so that the issue of equity infusion can be taken up by the Cabinet Committee on Economic Affairs (CCEA) in the next few weeks.

Once the two subsidiaries are operationalized, the airline would be able to transfer almost 19,000 of its 40,000 employees to them, officials said. The airline has already floated the two companies which are ready to be operationalized as soon as the government nod is received, they said.

The two companies are Air India Engineering Services Limited to carry out MRO operations and Air India Transport Services Limited for ground handling. The officials claimed that both subsidiaries would be able to earn profits right from the first year itself.

The problem of integrating about 40,000 employees is being dealt with by Justice Dharmadhikari Committee which would address the long-pending human resource issues of the airline in a time-bound manner.

(Agencies)