(Reuters) – State-owned carrier Air India has sought 21.21 billion rupees ($309 million) of additional equity from the government for the fiscal year 2018-19 to make pending payments to its vendors, a source at the airline told Reuters on Monday.
The Air India logo is seen on the facade of its office building in Mumbai, India, July 7, 2017. Picture taken July 7, 2017. REUTERS/Danish Siddiqui
Air India owes about 18 billion rupees to its vendors, including lessors and banks that have demanded payment from the beleaguered airline, after the government’s unsuccessful efforts to find a buyer for its 76 percent stake.
The airline expects to receive the additional equity within the next 7 to 10 days after which it will be able to clear all dues, the source said, adding that this is above the 6.5 billion rupees it has already received for the year.
India last month shelved a plan to sell a majority stake in Air India due to lack of interest from bidders, in the latest setback in its ambitious efforts to rescue the ailing airline that has survived for years using taxpayer funds.
The government will continue to support the loss-making airline’s financial requirements while it works on alternatives, Junior Civil Aviation Minister Jayant Sinha had said, without giving a specific timeline for a new plan.
Three banks and two aircraft leasing firms have served default notices on Air India over the last few weeks, the Business Standard newspaper reported earlier on Monday, raising concerns about the state-owned carrier’s finances and credit-worthiness.
San Francisco, United States-based Wells Fargo Trust Services and UAE’s state-owned Dubai Aerospace Enterprise (DAE) have sent letters of demand for pending rental payments, the newspaper said, citing sources.
A DAE spokesman told Reuters that they were not owed $10 million by Alliance Air, and that they had not issued a notice of default to Alliance.
Alliance Air is a unit of Air India that operates regional flights to smaller towns and cities in India.
Wells Fargo could not be reached outside usual U.S. business hours.
Three lenders from a 22-bank consortium have also written to Air India raising concerns that the company is turning into a non-performing asset, Business Standard said. The three banks are Standard Chartered Bank, Dena Bank (DENA.NS) and Bank of India Ltd (BOI.NS).
The airline has received a notice from banks for non-payment of dues that is being looked into by the government, the source confirmed.
A Standard Chartered spokesman in India declined to comment.
Bank of India and Dena Bank did not immediately respond to requests for comment.
Reporting by Abinaya Vijayaraghavan in Bengaluru and Aditi Shah in Delhi; Additional reporting by Alexander Cornwell in Dubai; Editing by Subhranshu Sahu, Sherry Jacob-Phillips and Sunil Nair