Air Ministry: Air India gets bailout on promise of efficient turnaround

2012 03 20

AIR INDIA's bail-out, paid as a capital infusion worth INR32 billion (US$616.5 million) was approved on the promise of improved performance and an efficient turnaround, said the Ministry of Civil Aviation.

"We will bail it out, but not indefinitely...[the carrier] has to improve its efficiency," said minister Ajit Singh on the sidelines of the Indian Aviation Show in Hyderabad, on a carrier struggling with debt of INR430 billion.

Boeing has agreed to pay half of Air India's compensation demand at US$500 million for its delayed delivery of 27 Dreamliners on order since 2006 for delivery start of 2008, reports the Press Trust of India. This was part of a larger order of 111 aircraft including those from Airbus worth $13 billion.

The government aims to push for more from the aircraft manufacturer to include discount in services and cash.

It is confident that India can weather a tough market of high jet fuel costs and decline based on a rise in demand for Asia-Pacific carriers. India itself is forecast to grow from a increase of compound annual growth rate (CAGR) 10.9 per cent in last five years, of which two-thirds was international volume.

Its passenger growth is the fastest set to rank in the first three markets of 420 million passengers by 2020 compared to 2010's figures of 140 million.

The state's focus on Public Private Partnership (PPP) in the airport sector has increased the number of Greenfield and modernisation projects is dependent on economic regulatory framework in an Air Cargo Promotion Policy it hopes to attract investment.

Source Shipping Gazette - Daily Shipping News

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