Air India in rough weather; seeks loans to meet working capital needs

Facing financial headwinds, Air India is in discussions with public sector banks to seek working capital loans to tide over cash paucity which also caused delay in December salary payments to a section of employees.

Despite making an operational profit for the first time in a decade in 2015-16 at ~105 crore, the airline has reported cumulative losses of more than ~700 crore in the first six months of this financial year.

“As long as we have debt and losses in our books, we are bound to have cash paucity. There is a cash crunch currently also and to tide over the problem, we are talking to the banks for some working capital loans,” highly placed sources told PTI.

However, they said the current cash requirement is just "marginal" and the situation is not so bad that it can hit operations.

The airline spokesperson was not available for comments. Significantly, Air India is expected to give a detailed presentation on its financial and operational performance to the Prime Minister's Office (PMO) on Friday.

According to sources, Air India had to delay by a few days the payment of salaries for the month of December to a section of employees, apparently due to tight cash situation.

"This was after a long time when some of the employees were paid salaries on January 3 whereas generally all are given their payments on 30th or 31st of a particular month when salary is due," another source at the airline said.

Air India, which is floating on a ~30,000 crore bailout package from the central government, is saddled with ~46,570 debt. This includes ~15,900 crore worth aircraft-related loans.

The ten-year long bailout package for Air India was approved by the previous UPA government in 2012. Of the total amount, so far more than ~24,000 crore has already been infused into the carrier.