CCEA approves Rs 1200cr equity infusion in Air India

The decision was taken at a meeting of the Cabinet Committee on Economic Affairs chaired by Prime Minister Manmohan Singh.

The airline, which is incurring Rs 600 crore monthly loss, has so far received Rs 2000 crore in the past two financial years.

As Air India is passing through critical financial crunch, the equity induction would not only ease the cash flow into the company but also preclude borrowings from markets at high costs, an official release said.

Air India's present paid-up equity capital is not sufficient for an aviation company of its size which is already struggling to address costly legacy assets, a weakening revenue stream and high cost structure resulting in rising liabilities.

The Group of Ministers had, at its meeting held in February 2010, recommended rationalisation or harmonisation of the wage costs and "legacy" union agreements.

It had also supported the setting up of support businesses of MRO, ground handling and cargo.