New Delhi: A warning by state-run refiner Indian Oil Corporation (IOC) to hold jet fuel supplies to Air India at some airports was sorted after a late Monday evening intervention from the ministry.
According to a senior executive, the IOC said it would stop supplies at six airports, including Pune, Vizag and Chandigarh due to payment defaults by the airline.
An Air India spokesman said the issue was later resolved after a meeting with aviation ministry officials.
Cash-strapped airline has been struggling to make payments
The cash-strapped airline has been struggling to make payments. It had a debt of more than Rs 54,000 crore last year when the government tried to sell a 76% stake in the airline.
The government then transferred about Rs 29,000 crore of working capital debt into a special purpose vehicle — Air India Asset Holdings (AIAHL).
With this, the airline’s annual interest payment burden had come down from Rs 4,400 crore to about Rs 1,700 crore. Total debt of the carrier, including that taken over by the government, has risen to over Rs 58,000 crore now. The government has announced a bond issue of Rs 7,000 crore to be raised by AIAHL, which will be used to repay the national carrier’s debt that has been transferred to the SPV.