Tags: Govt , Praful Patel , Air india

New Delhi, Nov 22: Government may soon decide to infuse additional equity of Rs 1,200 crore to strengthen the cash-strapped Air India, which has placed a Rs 40,000 aircraft acquisition order.
"The government will infuse Rs 1,200 crore equity in Air India," Civil Aviation Minister Praful Patel said after he addressed a session at the Hindustan Times Leadership Summit here today.

Air India has a paid-up capital of Rs 145 crore and authorised capital of Rs 1,500 crore. It has already moved the government for infusion of equity as well as a soft loan of Rs 1,000 crore to enable it sail through the financial crisis the industry is facing. The ministry has also backed its demand.

Asked by when such a decision would be taken, informed sources said it could be expected within a month or two as the UPA government was in its last leg.

Patel had recently said the flagship carrier was owned by the government and like an owner of a company, government should be ready to infuse liquidity into it.

He had said it was "absolutely unacceptable" that AI, having a very small equity base of Rs 145 crore, had an estimated order of Rs 40,000 crore to buy 111 aircraft.

The 77-year-old airline had initiated a fleet renewal programme three years ago and merged with its sister airline Indian last year.

The airline like its private sector peers was under severe pressure due to very high fuel costs coupled with a drop in traffic, as fallout of the global economic slowdown. It is estimated to lose around Rs 2,300 crore this financial year.

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