13 Apr 2012

Airline debt plan approved

6:52 am on 13 April 2012

The Indian government has approved a debt restructuring plan to save Air India, the national airline.

Civil Aviation Minister Ajit Singh said 30 billion rupees ($US5.9 billion) would be injected into the airline by 2020.

Mr Singh said the restructuring was necessary as the government could not continue to spend public money on it.

After a meeting of the Cabinet Committee on Economic Affairs, he said that around 7.4 billion rupees of Air India's assets would be converted into non-convertible debentures.

The BBC reports the airline has outstanding loans and dues of 67.5 billion rupees.

In February, three state-owned oil firms - Indian oil, Bharat Petroleum and Hindustan Petroleum - halted supplies to the airline for almost four hours for non-payment of dues.

Last year, the airline was put on a cash-and-carry deal for oil, which meant that Air India had to pay every time it refuelled its planes.