Cabinet nod for Air India bailout likely: Patel

The aviation ministry will shortly seek the cabinet's approval to infuse fresh equity capital in India's flagship airline Air India, which is deep in the red, civil aviation minister Praful Patel today said in New Delhi.

"We are working (also) on replacing Air India's high-cost debt with a low-cost one," Patel said at an airline symposium. The state carrier is taking a series of cost-cutting measures which will soon start showing positive results and help in curtailing losses, he added.

"The government is committed to equity infusion in Air India, and is also committed to reduce the high cost debt of the airline to low cost debt with the assistance from banks," Patel said.

Air India is currently saddled with a debt of Rs 16,000 crore on an equity base of Rs145 crore. It has accumulated losses of over Rs7,200 crore up till March 31, 2009. The airline has been demanding a bailout package from the government, consisting of equity infusion and a soft loan.

Patel also said the ministerial committee constituted to look into the issue of reduction of sales tax on aviation turbine fuel will meet soon to decide on the matter. Airlines have been demanding reduction of sales tax on jet fuel to 4 per cent from an average of 26 per cent at present.