Patel reviews Deloitte's plan for Air India

Civil Aviation Minister Praful Patel held another round of meeting with top officials of Air India in Mumbai on Tuesday to review the financial performance of the government carrier.

In the three-hour meeting with Civil Aviation Secretary Naseem Zaidi, Joint Secretary Prashant Sukul and Air India Chairman Arvind Jadhav, the minister discussed the financial plan made by advisory firm Deloitte.

Representatives of Deloitte, which had vetted the financial plan of the national carrier, were also present in the meeting.

Sources said matter such as number of aircraft to be acquired on lease and funds arrangement were also discussed.

"The meeting discussed ways to increase the domestic market, by providing more flights, and creating a market in the smaller cities, by introducing flights with smaller aircraft," said a source who did not want to be identified.

The airline management insisted on getting Cabinet clearances to form a strategic business unit and permission to reopen the wage agreements.

In the report, Air India has asked for an equity infusion of Rs 2,000 crore (Rs 20 billion) more from the government in the current financial year.

This demand is over and above the Rs 1,200 crore (Rs 12 billion) the airline is likely to receive soon.

Patel had earlier said the government would release this Rs 2,000 crore for the beleaguered airline. This equity infusion will give the airlines enough strength to negotiate with the oil companies and airport operators and get some discounts.

State-run oil companies, to which the carrier owes around Rs 2,300 crore, have already refused the airline credit from December 13, forcing it to pay them around Rs 12.5 crore (Rs 125 million) daily for the fuel it requires for national and international flights.

Air India also owes over Rs 600 crore to the Airports Authority of India.

Air India received Rs 800 crore last fiscal, increasing its equity base to Rs 945 crore (Rs 9.45 billion) and has a total debt of Rs 40,000 crore or Rs 400 billion (over Rs 19,000 crore or Rs 190 billion is high-cost working capital debt).

Air India's annual interest payment is about Rs 1,800 crore (Rs 18 billion) and the airline has accumulated losses of over Rs 15,000 crore (Rs 150 billion).

The carrier lost Rs 2,226 crore (Rs 22.26 billion) in 2007-08, Rs 7,189 crore (Rs 71.89 billion) in 2008-09, and Rs 5,551 crore (Rs 55.51 billion) in 2009-10.

The meeting will continue on Thursday.