Air India A319. By Rob Finlayson

The Indian government said Thursday it will invest INR300 billion ($5.76 billion) through 2020 to restructure struggling Air India (AI), including an immediate INR67.5 billion ($1.3 billion) injection.

The state-owned carrier will also spin off its MRO and engineering units into separate subsidiaries, civil aviation minister Ajit Singh told reporters following a meeting of the Indian cabinet, according to multiple news reports from India.

While AI is getting a much-needed financial boost, the Indian cabinet put off a decision on allowing direct investment in Indian carriers by foreign airlines (ATW Daily News, April 11). Though approval still appears likely, the delay is a blow to privately held Kingfisher Airlines, which is counting on foreign airline capital to help turn around its stressed financial situation.

Singh has said AI will also be eligible for foreign airline investment, but the government will maintain majority ownership and control.

Meanwhile, the cash infusion into AI will enable the carrier to take delivery of all 27 Boeing 787s it has on order, though Singh said the airline will likely seek sale-and-leaseback deals on some of the Dreamliners (ATW Daily News, March 22).

Singh conceded to reporters that strapped AI “hasn’t been able to pay salaries for a long time” and is also behind on payments to airports.