The Indian government has refused to help Air India (AI, Delhi International) as it struggles to repay its loans due to an exchange rate gap. Citing official sources, the Times of India reports that Air India is looking at a shortfall of INR3 billion (USD46.6 million) per year due to a change in the exchange rate which was not accounted for.
Adding to Air India's woes, the government has also been tardy in delivering promised cash injections under the beleaguered carrier's turnaround plan (TAP), forcing it to seek loans.
"Due to these two factors, we have sought INR25-30 billion (USD388-466 million) from the government within the TAP that has not been approved. With this delay, we had to raise loans and that added to our interest burden," an official told the news site.
The Indian government has been supporting Air India for many years, with bailouts worth about INR300 billion (USD4.6 billion) since 2012. Rumours have circulated that the government is looking to sell off its 51% stake in the troubled airline. Most recently, the National Institution for Transforming India (NITI Aayog) has recommended selling off the airline completely. The Finance Minister Arun Jaitley supports the proposal. "If 86% of the flying can be handled by the private sector, they can handle 100% as well," he said last month.
The uncertainty over whether or not the airline will be privatised has led Air India to put on hold a plan to source seven B787-9s this month, as well as ten ATR aircraft for its subsidiary Alliance Air (India) (9I, Delhi International), according to a Times of India source.
Should the airline be sold off, however, it could jeopardise Air India's membership in the Star Alliance. Jeffrey Goh, CEO of the alliance, told the news site that the situation would need to be reviewed following a sale, particularly if the purchaser would be an airline. "If the ownership and effective control of AI is within the Star Alliance family, then we don't have a problem with that," Goh said. "[But] we don't want the acquisition of one of our members becoming a backdoor entry into Star Alliance."
