No bailout for Kingfisher, Air India needs to shape up: Minister
Civil Aviation Minister Ajit Singh on Wednesday ruled out any bailout package for Vijay Mallya promoted-Kingfisher which is under financial strain, and added that the state-owned Air India needed to get its act together.
"It's a private enterprise and the banks can only lend if they are satisfied with the business plan of the company," the minister told reporters here.
Singh's response came when asked if the government was willing to give any financial support to Kingfisher. Mallya had written to the minister and said the airline would not be able to sustain the present scale of operations if it did not get funding soon.
"So, they have to give the business plan and if the banks feel they can recover their money and make profits, they will lend money. Otherwise they wont," said Singh.
Asked about ailing national carrier Air India, the minister said the government had an obligation towards sustaining the company as it was a state-run firm.
"Air India is a public sector unit, so government has an obligation. But there also, Air India will have to become competitive, they will have to restructure their costs in line with the industry as a whole because government cannot keep pouring money."
Currently, the national carrier has a total debt of Rs.43,777 crore, including loans and dues it owes to vendors like oil firms and airport operators.
A fianancial restructuring plan is being worked out by SBI Caps ( a financial advisory subsidiary of the State Bank of India) and consulting major Deloitte.
"There was a hitch in the plan given by SBI Caps, but I think it will work out," said Singh.
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