Mumbai:
After a detour toward what seemed like better times, Air India is back to familiar territory - it's on the cusp of such a major cash crunch that employees may not get their salaries after March 2011.
Every month, salaries for those on the Maharajah's service total 300 crores. But from November 2010 to March 2011, the airline projects a shortfall of over 1900 crore rupees. For every day of that period, it will earn 50 crores, but will spend close to 63 crores.
In addition to salaries, fuel payments are a major expense. And oil companies are no longer willing to accept the Maharajah's IOUs - outstanding payments for fuel are a whopping 2300 crores.
What could propel the airline over the next few months is 1200 crores that the government promised to pump in provided Air India realised targets aimed at making it a leaner, meaner machine. While some benchmarks have been met - returning leased airplanes, for example, and retiring older ones - the number of employees and salaries still remains an issue. The 1200 crore infusion is expected in the next few days.
Earlier this week, Civil Aviation Minister Praful Patel said on NDTV's The Buck Stops Here that he is considering other options. "I feel that a little bit of injection... of private equity...I'm not talking about privatisation but certainly by way of an IPO. Bringing in more stake holders, bringing in more participation of others besides the government will certainly help," he offered.
In August, Air India officials shared promising numbers. Ticket sales from April to August were up by 24 percent. And while the Maharajah still had his belly, the airline was trimming the fat - duplication of routes was controlled, and old aircraft were being replaced with newer ones, leading to lower maintenance expenses and fuel bills. However, the net losses for 2009-10 equal nearly 5,551 crores.
The bigger picture isn't much prettier. The airline's overall debt stands at 40,000 crores - of this, 18,000 cores is attributed to working capital loans. The interest payments alone are enough to warrant oxygen masks.