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Aviation Min to Seek Rs 6,500 Cr Capital for Air India

  • The Civil Aviation Ministry will move the Cabinet next week seeking Rs 6,500 crore capital for Air India's revival, even as Boeing has agreed to pay USD 500 million as compensation to the national carrier for delay in delivery of Dreamliner.Civil Aviation Minister Ajit Singh also asserted the bailout cannot be for an indefinite period and the airline has to improve its efficiency.Meanwhile, Boeing has also agreed to pay USD 500 million as compensation for delay in delivery of aircraft."As far as financial stress for Air India, which is a government concern, we have moved for financial reconstruction package, including Rs 6,500 crore capital infusion.

  • "We are moving the Cabinet this week and also asking the Cabinet to give final permission to purchase Dreamliners," Civil Aviation Minister Ajit Singh said in a press conference on the sidelines of India Aviation 2012 show.He said the government is unlikely to bail out Air India again if it fails to improve efficiency parameters. "We will bail it out, but not indefinitely...(the carrier) has to improve its efficiency," the minister said.

  • Commenting on Boeing's compensation for delay in delivery of Dreamliner, Joint Secretary in the Ministry of Civil Aviation Prashant Shukul, said, "The compensation demand from Air India is one billion dollars. However, Boeing has agreed to pay USD 500 million as compensation for the delay," told reporters on the sidelines of the aviation show here today.The government is trying to push Boeing to pay more, he added. The compensation package would be a mix of both discount in services and cash, a senior official had said earlier.State-run Air India has sought a compensation package from the US aircraft maker for delay in the delivery of Boeing 787 Dreamliners.

  • Air India had placed orders for 111 aircraft at an investment of over USD 13 billion with Airbus and Boeing in 2006 to replace its ageing fleet and leased planes. Air India had ordered 27 Dreamliners and Boeing failed to stick to the delivery schedule. As per the original delivery schedule, Boeing was to start delivery from September 2008.Official figures show the debt-ridden carrier has outstanding loans and dues worth Rs 67,520 crore, of which Rs 21,200 crore is working capital loan, Rs 22,000 crore long-term loan on fleet acquisition, Rs 4,600 crore vendor dues besides an accumulated loss of Rs 20,320 crore.

  • Meanwhile, Civil Aviation Minister said the Asia Pacific region, led by the expanding Indian and Chinese markets, will help in boosting the fortunes of the sagging global aviation industry that was hit hard by rising fuel costs and European debt crisis during 2011."The global economy faced rough weather in 2011. The effects of rising fuel cost, the European debt crisis were felt across the world and the aviation industry also felt the tremors. As per estimates, cargo markets worldwide contracted by 0.7 per cent," the minister said, adding the skies are not expected to clear any time soon and 2012 could prove to be equally challenging.

  • As per market estimates, European airlines are going to be hit the hardest in 2012, however, it is expected that Asia pacific would provide the boost to the sector led by expanding Indian and Chinese markets, Singh added.India is the fastest growing civil aviation market in the world and by 2020 will be amongst first three markets with about 420 million passengers being handled by the Indian airport system as against 140 million in 2010, he said.

  • Talking about the Indian government's initiatives in the airport sector, Singh said the focus is on Public Private Partnership (PPP)."A large number of Greenfield and modernisation projects in Airport Sector are under development on PPP model across the country to develop facilities conforming to international standards and operational performance," he said, adding an appropriate economic regulatory framework for future airport is also being worked out to attract investment and ensure their viability.As the cargo handled at Indian airports witnessed a growth of CAGR 10.9 per cent in the last five years, with international cargo accounting for two-thirds of the total, the Civil Aviation Ministry is formulating an Air Cargo Promotion Policy, which will be brought forward for consultation, he said.

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