India's government will consider putting more capital into state-run Air India if the national carrier improves its operational performance, Civil Aviation Minister Praful Patel said on Sunday. "The government has said based on performance parameters, it will look at inducting fresh equity," Patel said.
The government put 8 billion rupees into Air India in the last fiscal year and has so far allocated 12 billion rupees in its current fiscal budget to help the airline reduce its losses and debt, which have been mounting.
Patel said Air India currently has working capital debt of 180 billion rupees. The airline is currently going through a debt restructuring process as it looks to clean up its balance sheet with SBI capital managing its overall debt recast.
"The financial restructuring will also include reducing the cost of the debt. We have to replace the high cost debt with low cost debt," Patel said. The carrier will restructure the working capital loan through a mix of bonds guaranteed by the government over the next four years, Air India said in a separate statement on Sunday.
It also said it would raise additional capital from the sale of land and buildings or use them as security for fresh loans. Air India Chairman Arvind Jadhav has said the airline, which incurred a loss of 54 billion rupees in the year to March 31, 2010, expects to pare its losses by around 75 percent this fiscal year.
The carrier said on Sunday it expected a 29 percent increase in its operating revenue as air traffic improves on a rebound in business travel. Air India has said it has no plans to cut jobs.