A day after Star Alliance rejected Air India, following a three and a half year courtship, the Indian Government has announced it will inject INR5,000,000,000 (approx US$113,000,000) as equity in the financially failing airline. This equity cash stake in the government run airline will be paid out in two payments.
This cash infusion follows an ‘official’ cash injection of INR20,000,000,000 (US$451,700,000) into Air India over the past fiscal year.
Along with the announcement of the US$113-million cash injection, India’s Minister for Finance, Namo Narain Meena, has additionally announced that the Government has requested approval from the Parliament to reimburse Air India INR4.25-bilion (approx US$96-million) to cover the costs incurred for transporting the Prime Minister and other Government Ministers between 2008 and 2010.
While Air India certainly needs to be reimbursed for the costs associated with flying government officials, at the rate the airline is burning through cash, a cash injection of US$113-million will only cover the airline’s daily operating losses for three weeks.
How long this can go on is anyone’s guess at this point.