Mayday, Mayday! The Crisis at Air India

By Ankur Deo | December 12, 2019

In a continuation to our recent article titled ‘Air India in Dire Straits’, the predicaments for India’s flag bearer do not seem to be ending any time soon. The crisis-hit airline has sought a Rs.2400cr ($400m)  government guarantee to meet its operational requirements. While government is in the process to work out details for disinvestment of the airline, this guarantee would ensure payment of pending salaries of employees for the month of November, and would keep the airline afloat for a brief while.

The $400m is a part of $1.3b government guarantee that was allocated to the airline from National Small Savings Fund (NSSF), a government pool of small savings from households, in the current financial year. Air India is already neck deep in almost $11b debt after not having reported a profit ever since it merged with Indian Airlines in 2007. Earlier this month, the airline reported its highest ever annual loss in the fiscal year 2018-19, citing reasons of ‘low fleet utilisation’ and ‘high fuel prices’.

According to airline officials, ever since Aviation Minister HS Puri made a statement in the Parliament on November 27, 2019, that ‘AI will shut down if not sold off,’ everyone to whom they owe money to have been demanding payment.

“We have reached a stage where it is becoming very difficult financially to continue. We need continued services/supplies as a functional airline, but people are now saying clear or reduce past dues first. We have requested the government to enable us to raise fresh loan of Rs 2,400 crore ($400m) by giving us sovereign guarantee to be able to keep flying” quoted the officials.

We will continue to watch the Air India saga closely as new events unfold.

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