Indian Aviation ministry invests Rs.199bn equity for Air India!

The Civil Aviation Ministry has reportedly said that the Government should invest as much as Rs. 199bn of equity in Air India Ltd. in five years to help the state-owned carrier return to profits.

Reports stated that the Government should also provide additional funds of Rs. 112bn in the five years to 2017 to help the carrier buy aircraft.

Air India said on Thursday that its board had approved issuing Rs. 75bn worth of preference shares to its lenders as part of its financial restructuring.

A government report says that the total debts of India's airlines are expected to rise to US$20bn in FY12 on the back of rising oil prices, high sales taxes on jet fuel and cut-throat competition.

Air India, which has a debt of US$4bn, is expected to account for more than half of the projected total losses of US$3bn for Indian airlines in FY12.

Domestic air passenger traffic is expected to grow by 12% per annum over the 12th Plan period ending in 2017, the working group report says.

The Civil Aviation Ministry also proposes to spend Rs. 175bn on the development of airports, the report adds.

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