Amidst the financial headwinds faced by Alliance Air, the regional carrier formerly part of Air India, the government has stepped forward to provide a much-needed boost. In a bid to address the airline’s financial struggles, the government has approved an equity infusion of Rs 300 crore into Alliance Air. This move comes as the carrier has been grappling with mounting losses and employee strikes in recent months.
Alliance Air, currently owned by AI Assets Holding Ltd (AIAHL), a special-purpose vehicle formed by the central government, operates approximately 130 flights daily. However, the airline has been plagued by a range of issues, including strikes by pilots protesting against the non-restoration of salaries to pre-Covid levels and non-payment of allowances.
The finance ministry’s decision to inject Rs 300 crore into Alliance Air demonstrates the government’s commitment to supporting the struggling carrier. This equity infusion will provide much-needed financial stability and help alleviate some of the financial pressures the airline is facing.
It is worth noting that Alliance Air operates flights under the ‘Alliance Air’ brand, with operations carried out by Airline Allied Services, which recently changed its name to Alliance Air Aviation Ltd. The company’s authorized capital is Rs 2,000 crore, with a paid-up capital of Rs 402.25 crore.
In the fiscal year 2021-22, Alliance Air experienced a net loss of Rs 447.76 crore, and its cash loss widened to Rs 224.18 crore in the financial year ending March 2022. These financial challenges have underscored the need for immediate intervention to ensure the viability and sustainability of the airline.
Additionally, it is worth mentioning that the government has plans to divest four companies that were previously part of Air India, including Air India Air Transport Services Ltd, Air India Engineering Services Ltd, Airline Allied Services Ltd, and Hotel Corporation of India Ltd. The government aims to initiate the process of divestment for these companies in due course.
The equity infusion into Alliance Air serves as a short-term measure to address the airline’s immediate financial concerns. However, the government’s long-term plan to divest the four companies demonstrates its commitment to restructuring and revitalizing the aviation sector. With these measures in place, the government aims to ensure the sustainable growth and success of Alliance Air, as well as the overall development of the Indian aviation industry.