The government has approved a bailout for Air India totalling 300 billion rupees ($5.8 billion) which will be injected into loss-making carrier over the next nine years.
The funds, which will enable the troubled carrier to restructure its debt burden into soft loans and bonds, will be linked to performance milestones such as percentage of seats filled, according to aviation minister Ajit Singh.
An immediate injection of Rs 6,750 crore is expected to meet the airline’s working capital requirement. This is in addition to the equity infusion of Rs 3,200 crore that has already been done.
The decision follows discussions in Cabinet in which ministers pitched for equity infusion in order to bail out the national carrier.
Singh revealed he expects Air India to make an operating profit by 2018 as it restructures operations. The government also approved the carrier’s plans to add 27 Boeing 787s and three 777s, according to reports.