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IA likely to get more funds

Talks are on between the finance and civil aviation ministries for getting more funds for Indian Airlines.

This included Rs 1.25 billion promised in last year's budget but not been fully released to the ministry yet.

"We are also asking for Rs 2 billion as soft loan for Indian Airlines and Rs 1.5 billion for grounding of aircraft in 1980s," Civil Aviation Minister Ananth Kumar told journalists. He said these finances would help restructure Indian Airlines finances.

The minister said Indian Airlines would make a profit for the second consecutive year as compared to the losses incurred in eight successive years. Due to the recession, the growth in traffic was -3 per cent which affected profits this year.

The civil aviation ministry is considering the possibility of finding a strategic partner for Indian Airlines. A cabinet note was yet to be prepared on the subject. "It is a long process involving committee of secretaries, cabinet committee on economic affairs and the full cabinet," he said.

Ananth Kumar said if the proposal for a global strategic partner is approved then global advisors would be appointed who will carve out a road map for disinvestment. The disinvestment commission has recommended that 40 per cent each of equity be provided to the strategic partner and a similar quantum be retained by the government and 20 per cent to foreign institutional investors and employees.

The total disinvestment so far has been Rs 120 billion. In case, disinvestment of Air India took off, then it would be a mega-disinvestment making a substantial difference to budgetary revenues.

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