Silver Lining for Air India

By Ankur Deo | December 23, 2019

It looks like the end of the year won’t be as grim for Air India as one would had anticipated. In our recent series of articles, namely: ‘Air India in dire straits’, ‘Mayday, Mayday! The Crisis at Air India’, and ‘Update on the Air India Crisis’, we had summarized the plight of India’s flag bearer. However, every cloud has a silver lining, and apparently, Air India has found a way to make the year-end a tad bit ebullient!

In a recent turn of events, Indian government has provided the airline with a Rs.500cr ($80m) guarantee, which shall secure enough funds for the airline to keep up with its operational requirements (for now). In a struggle to remain afloat due to liquidity issues, the airline had sought Rs.2400cr guarantee from the government, of which this Rs.500cr is a part of. Well, something is better than nothing!

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Moreover, the airline has also claimed that the government owes it an amount of Rs.798cr ($120m) for flights operated for VVIPs and government officials, which is exclusive of the amount Air India has sought from the government to carry on with its operations.

Air India needs cash to remain functional at least for a month till the government sells its full stake in the airline, thereby handing it over to new owners. For now, this Rs.500cr guarantee would be a sigh of relief for AI, however, this won’t solve all their problems, and we expect them to see in the news pretty soon! We will keep a close eye on how events unfold for AI.

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