Air India, the state-owned airline of India that recorded an operational profit of about $4.9 million in November 2010, has been approved for a bailout with an infusion of $267 million by the Cabinet Committee for Economic Affairs (CCEA) of the country.
The bailout will further help airline earn profit and boost its fleet by catering to more middle-class travelers by offering them cheap fares so that they can afford to fly, the ministry of civl aviation of India said in a statement.
According to the ministry, with the infusion amount Air India will be also increasing flights to more and new destinations.
Air India, which has been running in loss and has debts of 40,000 crore, was formed by the merger of domestic and international carriers of India. However, the entity did not help the airline reduce its losses in the last three years of its inception.
The government’s bailout should ensure the airline has funds to make profits, though Air India should see to it that they rationalize their wage structures and workforce, said a CCEA official.