NACIL seeks Rs14,000 crore bailout, but may get much less

08 June 2009

The National Aviation Company of India Ltd, the company that operates national carrier, Air India, will take a blueprint to the civil aviation ministry this week on how it plans to utilise a Rs14,000-crore bailout package that it is seeking.

On Saturday, the civil aviation ministry held initial discussions in this regard with the NACIL, created through the Air India-Indian Airlines merger in 2007. The meeting will be the last NACIL is likely to have with the ministry before the union budget is announced next month. 

However, various unconfirmed reports suggest that NACIL, faced with losses that are mounting by the day, is unlikely to get the amount that it is demanding, and may have to settle for around Rs5,000 crore, while aviation minister Praful Patel's plan to make a public offering for the airline is not likely to take off soon.

Indian Express quotes an unnamed 'very senior source' in the ministry as saying, ''An equity infusion of up to Rs1,500 crore, plus a soft loan of Rs3,000-3,500 crore will be considered on a priority basis. There is no chance of the airline receiving a package of Rs14,000-crore package.''

The meeting next week will also look at the issues, such as the setting up a national passengers' advisory board to address passengers' needs, ways to optimise capacity and preparing a viable business model for the next five years.

''We have submitted a proposal to the ministry recently asking for a bailout package,'' said a NACIL spokesperson without divulging the size of the package. He further confirmed that Air India is setting up a national passengers' advisory board.