India’s cash-strapped airlines continue to struggle.
National carrier Air India is set for a government infusion of funds that come with stringent conditions, including a ban on ordering new aircraft other than the Boeing 787s.
The government believes Air India can become profitable by 2018, at which time it is being speculated that the government will seek to sell off the airline to private interests to get its money back.
Meanwhile, auditors for Jet Airways have warned that the company needs to raise money in order to meet its obligations and fund JetLite, its loss-making subsidiary.
Jet said it is confident of getting equity soon. It plans to raise US$300 million in sale and leaseback of 40 aircraft owned by the company.
India’s domestic airline industry is facing turmoil after Kingfisher, the second-biggest carrier, cancelled recent flights due to a severe cash crunch and a dispute with lessors, which own most of its aircraft.
Surging fuel costs and severe competition have added to the airlines’ woes.
The sector is expected to see unprecedented losses of US$2.5-3 billion this year, a Centre for Asia Pacific Aviation report has said.
