The additional budget support means the government’s Rs 30,231-crore equity infusion under a 10-year turnaround and financial restructuring plan will come to an end two years ahead of its schedule, ie, FY21. AI has received equity infusion of Rs 28,175 crore till date.

So far this year, the government has provided Rs 1,630 crore, including supplementary provision of Rs 980 crore in August, to Air India as compared to the budget estimate of only Rs 650 crore to tide over cash shortage.

“Additional Rs 2,200 crore may be provided to AI subject to availability of funds in the second half of this year,” a government official said. If fund availability becomes an issue, the government might provide guarantee to Air India to raise that much money from banks, the official added.

Ahead of elections, the government finances are under pressure due to increasing demand on resources for various welfare schemes/programmes including the new minimum support price (MSP) policy and the national health protection scheme.

Rising aviation turbine fuel (ATF) price has been hurting airlines for over a year. AI’s fuel bill in FY17 was Rs 6,338 crore and could have gone up by 10% in FY18, an AI official said. The jet fuel cost would be even higher in FY19 as ATF prices have already gone up by 12.5% in the first five months of this fiscal.

With the plan to sell 76% in the airline coming to naught this year, the Centre has no option but to provide additional support to keep the Maharaja floating. According to the AI sale document, the buyer was supposed to acquire liabilities and debt to the tune of Rs 33,392 crore of the total liability of approximately Rs 51,400 crore as in March 2017.

Despite savings on account of lease rentals and better utilisation of aircraft, the national airline might post a loss for FY18 that is slightly lower than FY17’s Rs 5,765. AI’s projected net loss for FY18 is estimated at Rs 3,579 crore as per a written reply from the ministry of civil aviation in January this year. The ministry was conservative in its FY17 loss estimates as actual losses turned out to be Rs 2,000 crore more than the Rs 3,728-crore provisional figure for that year.