In the second attempt to privatise Air India, the government has put up its entire 100 percent stake for sale.
The aviation ministry has declined to grant equity support to divestment-bound Air India, with the government rejecting the national carrier's request for funds.
"Air India used to get some funds as a part of equity support in the supplementary budget presented every year in September. Like earlier years, a request to fund losses – also being incurred due to COVID-19 – was made, but the aviation ministry rejected the request," an official told The Economic Times.
Moneycontrol could not independently verify the story.
The aviation ministry usually forwards such requests to the finance ministry, but did not do so this time, The Economic Times reported.
In the second attempt to privatise the national carrier, the government has put up its entire 100 percent stake for sale. The current deadline for bids is August 31, which was extended due to the COVID-19 outbreak.
The government took over more than 60 percent of Air India's debt to make it more attractive for bidders. Air India's debt had lowered to Rs 23,286 crore from Rs 62,000 crore, according to the EoI document released in January.
But, the airline's debt has risen, since it has been taking working capital loans, the report said.
Air India has been utilising working capital debt, and some dues received from the government, to pay its expenses, the report said.
"For the months of April, May and June, Air India raised Rs 900 crore through banks as working capital loans, which were guaranteed by the government. Also, the airline received Rs 500 crore from the government against the money that the government owes for operations of VVIP flights," an official told the publication.
Domestic flight operations were halted for two months due to the nationwide lockdown, and international flights are still suspended. Air India is currently operating some domestic flights and repatriations flights.