Cabinet approves $112 million for Air India
Ailing state carrier Air India (AI) was given a much-needed boost on Thursday when a cabinet committee approved a proposal for a $112-million cash injection, the Press Trust of India news agency reported.
The news will come as a small relief to the beleaguered airline, which is incurring monthly losses of Rs6 billion ($134 million), according to the civil aviation minister Vayalar Ravi.
Speaking in the upper house of parliament, Ravi said Air India was suffering from high fuel prices and stiff competition from privately owned airlines.
The national carrier has struggled to pay wages to its staff for months and Prime Minister Manmohan Singh told the lower house of parliament on Wednesday that he would do everything to ensure that salaries were paid as soon as possible.
Air India suffered another blow on Monday when its bid to join the Star Alliance was grounded after the global airline network said it had not met the minimum standards for membership.
The airline, which had been given a July 31 deadline to meet joining criteria in a range of areas from branding to ticketing, is currently waiting for approval of a five-year turnaround plan.
That includes more government cash and a new business plan that would increase its fleet size, cut routes and set up network hubs.
The Indian government pumped about eight billion rupees into the airline in the financial year 2009-10 and expects to put in another 12 billion this year on condition the company cuts costs.
The restructuring plan is currently under review.
Private airlines such as Jet Airways, Kingfisher and low-cost rivals Indigo and SpiceJet have replaced Air India as a preferred airline in recent years.
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