Air India Aircraft Sitting Idle Owing To Cash Crunch Of Rs 250 Cr Monthly!

The Airline’s list of problems seem to keep increasing every week. Air India is facing a cash crunch on a monthly basis, which is affecting the maintenance work of its aircrafts. As a result, several aircrafts are lying unutilized.

According to the civil aviation ministry, due to lack of funds, Air India is not being able to purchase all the spare parts it needs. The airline has been showing a deficit in cash on a monthly basis, which equals to Rs 200 Crore to Rs 250 Crore.

The ministry informed the Parliament’s Public Accounts Committee(PAC) that shortage of cash has been responsible for aircrafts not being operational despite a Turnaround Plan (TAP) which was implemented in 2011. Fleet expansion has also been hit by viability issues and an ongoing CBI probe into previous acquisitions on the airline.

The PAC is the governing body which is looking into Air India’s functioning after the government decided to disinvest 76 percent stake in the airline.

Replying on the measures taken by the airline to smoothen maintenance of its aircraft, the ministry told PAC that earlier the aircraft engines were sent abroad for overhaul and repair, but now these functions are performed domestically. The airline is also regularly talking to its suppliers to remove the credit hold so that a smooth supply of spares is maintained.

The ministry also stated that aircrafts acquired on lease were grounded for around two months at the time of redelivery as a number of conditions had not been satisfied by the airline.

Air India’s cash flow remains tight as total debt in the airline’s books stands at around Rs 49,000 crore. One of the objectives of the turnaround plan was to accumulate Rs 5,000 crore by selling properties, which has not happened and is a reason behind Air India’s debt remaining too high.

Though Air India’s turnover has been increasing, and the TAP and financial reconstruction plan have helped improve on-time performance, load factor and aircraft utilisation, cash losses remain high despite a declining trend. The national carrier was also planning to offer a VRS (Voluntary Retirement Scheme) to its employees. The plan was dropped as it was not financially feasible.