The carrier is expecting an equity infusion in 2012-13
Ailing
national carrier Air India has decided to go in for direct import of
Aviation Turbine Fuel (ATF) in a bid to curb the escalating cost.
The
AI board, which approved the direct import on Tuesday, also gave a
go-ahead to the state-owned carrier to soon appoint a service provider
who would source the supply as well as provide the necessary
infrastructure for storage and distribution of the same for in-plane
fuelling.
AI
expects to end the year with a higher-than-budgeted performance in the
revenues. However, the escalating cost in fuel is likely to set it back
by an additional Rs. 2,200 crore and its fuel bill is estimated to be
around Rs. 8,000 crore for 2011-12. Added to this, the additional
interest cost of Rs.1,500 crore eroded the profitability of the airline.
The
board also took on record the progress on the restructuring of the
working capital into long-term loans whereby Rs.11,000 crore worth of
working capital is proposed to be converted into long-term loans and Rs.
3,400 crore into cash credit facilities.
The government would provide support in respect of the non-convertible debentures of Rs. 7,400 crore.
AI
is expecting an equity infusion shortly in the financial year 2012-13,
which would not only improve its operating and financial parameters but
would also give considerable comfort to the institutional lenders in the
form of better net worth.
Meanwhile,
AI's operating and financial performance up to February this year
registered a continuous increase compared to last year. The passenger
revenue during February 2012 went up to Rs. 949 crore from Rs. 718 crore
in February 2011, registering a 32.2 per cent increase.
As
part of the risk management strategy, the board approved the hedging of
fuel up to 20 per cent of the total international uplifts and allotted a
specific amount in its budget. A risk management team of senior
officials was set up in order to continuously monitor and take positions
on fuel hedging.
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