Tuesday, April 24, 2018

Air India facing cash deficit of Rs 250 crore every month: Report

CUTTING a sorry figure of the national carrier, the civil aviation ministry has admitted that Air India is unable to purchase all the spares it needs, resulting in idling aircraft, due to a monthly cash deficit of Rs 200-250 crore that affects availability of funds for maintenance.
The ministry has told Parliament’s Public Accounts Committee that a restricted cash flow was responsible for inoperational aircraft despite a turnaround plan (TAP) being in force since 2011 while fleet expansion had been hit by viability issues and an ongoing CBI probe into previous acquisitions.
“There is a cash deficit of Rs 200 crore to Rs 250 crore every...
month which affects availability of funds for procurement of spares,” the ministry told the PAC even as it said that “every attempt” was being made to devote maximum financial resources to availability of spares to improve utilisation of aircraft.
It needed $300 million accessed through external commercial borrowings to liquidate outstanding dues of foreign suppliers in 2015 to improve the situation as maintenance expenditure soaked up Rs 2,500 crore or 12 percent of the debt-laden airline’s operating expenditure.
An examination of AI’s functioning by the PAC is significant in the light of the government’s decision to disinvest 76 percent stake in the carrier.
A parliamentary committee on transport, tourism and culture headed by Trinamool MP Derek O’Brien had opposed the plan but the draft report was “rejected” by NDA MPs on the panel.
The ministry told the PAC that aircraft engines earlier sent abroad for overhaul and repair were being maintained domestically. “AI is also in constant dialogue with its suppliers to remove the credit hold in order to maintain a smooth supply of spares for sustained and uninterrupted operations,” it said.
The ministry also stated that aircraft acquired on lease were grounded for around two months at the time of redelivery as a number of conditions had to be satisfied.
With a total debt totalling Rs 48,876 crore (government-guaranteed Rs 25,388 crore and non-GOI guaranteed Rs 23,488 crore) AI’s cash situation remains perilous despite improvements in operating profits.
The national carrier’s debt remains high as akey assumption or objective of the TAP — accumulation of Rs 5,000 crore by way of monetisation of properties — has not happened.
As against Rs 500 crore being monetised every year, AI has managed only Rs 725 crore till date and reason is “defective title deeds” and a bar by the ministry of urban development on sale of property given the airline on “perpetual lease”.
Though AI’s turnover has been increasing, and the TAP and financial reconstruction plan has helped improve on time performance, load factor, aircraft utilisation, hiving off non-core assets and gaining equity support, cash losses remain high despite a declining trend.
Also, plans to offer a VRS (voluntary retirement scheme) to employees was dropped as it was found to be financially unviable.

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