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Debt-ridden airlines told to put house in order

All domestic airlines except one (most likely IndiGo) recently have sought government help in raising finances from banks, lowering airport charges and in getting credit extension from oil companies.

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Debt-ridden airlines told to put house in order
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All domestic airlines except one (most likely IndiGo) recently have sought government help in raising finances from banks, lowering airport charges and in getting credit extension from oil companies. Now, in a bid to help the debt-ridden and loss making aviation sector, a core group on aviation plans to ask airlines to first set their house in order.

This core group was constituted after airlines sought the prime minister’s help in tiding over the present financial crisis. It comprises secretaries from civil aviation, petroleum, finance and commerce ministries. In its first meeting on Wednesday, group members took the view that airlines must review their operations before approaching banks and oil companies for help.

“The meeting discussed how airlines need to first come up with a viable business model. They need to evaluate their own finances, size of operations, capacity (number of seats), route and fares structures. This working group wants to save the airline sector but no decision was taken since this was the first meeting,” official sources told DNA.

The sources also said banks only want to give secured loans — loans which are secured against equity or other collateral. So the government will facilitate working capital loans from banks to airlines once the carriers themselves come up with a viable business model.

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