Oil refiners stop supplies to Air India at six airports

MUMBAI: State-run oil refiners have stopped fuel supplies to Air India at six airports in the country on payment defaults.

The airports are Kochi, Patna, Vizag, Pune, Ranchi and Mohali.

An Air India spokesperson confirmed the move by oil refiners.

"In the absence of equity support, Air India cannot handle the huge debt service liabilities,” he said, adding however that its financial health is improving and it’s moving towards a “healthy operating profit,”.

The refiners had on July 15 threatened to stop supplies at six airports but didn’t make the move after an intervention from aviation ministry officials.

The national carrier has been struggling to make payments.

It had debt of more than Rs 54,000 crore last year, when the government tried to sell a 76% stake in it. The government has since transferred about Rs 29,000 crore of its working capital debt to a special purpose vehicle — Air India Asset Holdings.

With this, the airline’s annual interest payment liability came down to about Rs 1,700 crore from Rs 4,400 crore. Its total debt, including that taken over by the government, has increased to over Rs 58,000 crore now. The government has announced a bond issue of Rs 7,000 crore by Air India Asset Holdings, the proceeds of which will be used to repay the debt that has been transferred to the SPV.