Air India Charters may bail out pauper AI

Cash-strapped Air India (AI) is now looking towards Air India Charters to bail it out, at least partially.

According to airline officials, the board of directors met in Mumbai on Tuesday and among other decisions, cleared a proposal to float a Rs2,000 crore-bond issue through its profitable arm Air India Charters, which runs low-cost operations under the brand Air India Express.

If successful, this bond issue could breathe life into Air India, which has been falling short of cash to even pay salaries to its employees for several months now.

The board also accepted the resignations of the three high-profile employees whose recruitment had been mired in controversy from the very beginning.

Chief operating officer (COO) Gustav Baldauf, chief of training Stefan Sukumar and COO of Air India Charters Pawan Arora were all made to resign in the last one month and since these were board appointments, their resignations were on Tuesday ratified by the board.

Airline officials dismissed reports of a new COO being appointed for AI, saying K M Unni has merely been handed charge by Baldauf and there was no new appointment to this post as of now.

The board also stamped approval to the airline’s plan to sell off properties in Paris, estimated to be about Rs10 crore. The airline had bought the residential flats way back and the selloff is part of a broader strategy to offload non-core assets.

The sale process is expected to be concluded soon.    

It is unclear whether the proposal by global consultancy Deloitte on the airline’s restructuring was also discussed at the meeting on Tuesday.

Among other things, Deloitte has suggested equity infusion to the tune of Rs17,500 crore to improve the debt-equity ratio significantly.

It has also mooted strategic fleet expansion and ways to improve load factors across sectors. As of now, AI has accumulated losses of over Rs15,000 crore when interest payment outgo stands at Rs1,800 crore annually and total debt burden is around Rs40,000 crore.