Air India to receive $909m from government

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Cash-strapped Air India will receive a cash infusion of nearly $1 billion from the government as it is tipped to record positive earnings for the current financial year.

Documents show that the Indian government has allocated a total of Indian rupees (Rs) 50 billion ($909 million) to the state-owned carrier in its 2013-14 budget. In addition, the airline is expected to generate Rs13.2 billion through internal and extra budgetary resources.

The allocation is less than the revised budget amount for the 2012-13 financial year, when Air India received Rs60 billion in direct budgetary support.

The government's economic survey documents, which were released together with the budget, show that Air India is expected to show positive earnings before interest, tax, depreciation and amortisation (EBITDA) for the 2012-13 financial year.

That is, however, at odds with recent comments from civil aviation minister Ajit Singh, who said in January that the airline's losses were projected to be about Rs4 billion monthly.

He has since convened a new committee to look at further measures that the airline could take to cut costs and boost its aircraft utilisation. The committee is due to report its findings to the minister by the end of March.

Under a turnaround plan for the under-performing carrier, approved by India's cabinet in April 2012, Air India was expected to show a positive EBITDA by the end of the 2012-13 fiscal year.