The government on Thursday took a number of decisions, aimed at pulling out ailing Air India from its financial mess and putting it on the road to profitability.

It announced that it would infuse additional funds into the airline to the tune of Rs. 30,000 crore till 2020, hive off the engineering services and ground handling business, and go ahead with the induction of 27 new Boeing 787 Dreamliners.

Announcing the decisions of the Cabinet Committee on Economic Affairs (CCEA), Civil Aviation Minister Ajit Singh said the CCEA granted approvals while giving its nod to the airline's financial restructuring and turnaround plan which would help the carrier get an upfront equity support of Rs. 6,750 crore to help tide over its dwindling fortunes.

Government guarantee

Addressing a press conference here, Mr. Singh said Air India would get the government guarantee for repayment of principal amount and payment of interest on the non-convertible debentures of Rs. 7400 crore proposed to be issued to financial institutions, banks, the Life Insurance of Corporation and used to repay part of working capital loans.

Mr. Singh said the government has also approved a proposal to make the airline's MRO (Maintenance, Repair and Overhaul) business and its Engineering Services as two wholly-owned subsidiaries. The MRO unit will get Rs. 375 crore over three years and is projected to be a profit-making company from 2017-18. About 7,000 employees of Air India will migrate to the subsidiary company.

The MRO unit will aim at tapping the potential of nearly $1.5 billion in the Asia Pacific region.

The ground handling unit, planned to be developed as a separate profit centre, will get Rs. 393 crore over a span of 12 years. This infusion will be based on equity support received from the government. The new subsidiary, where 12,000 employees will migrate, is projected to make profit from the current financial year itself.