IA plans to approach the Union minister for civil aviation Anantha Kumar to press for the implementation of the Kelkar Committee report, which has proposed a Rs 1,000-crore package for the airline.

In a detailed communique to the ministry, IA has stated that it faces the danger of folding-up if the centre further delayed injection of funds."Further delay in the acceptance of the Kelkar Committee report would result in IA not being able to replace and augment its fleet. As a result its market share will drop to 11 per cent in 2002-03," the note has stressed."This implies that the airline may fold-up, and the government stands to lose Rs 3,000-4,000 crore," it added.

IA has asked for strengthening of its balance-sheet, as suggested by the Kelkar report, to enable the state-run airline to mobilise funds fromthe primary market.

The airline has asked for a grant of Rs 200 crore as compensation for past decisions by the government which impinged on its profitability. It has also asked for an equity injection of Rs 125 crore, plus an interest-free loan of Rs 150 crore.

In the second phase of investment, the domestic carrier has sought permission for tapping the market with an initial public offer.

IA has rejected the Rs 325-crore aid approved by the finance ministry under the IK Gujral government.

The package had envisaged injection of equity in phases and in the form of margin money for acquisition of aircraft. Furthermore, the government aid was tied to the achievement of certain performance parametres by IA. The domestic carrier has contended that this package prevents it from becoming independent of future centre assistance.

"The promise of funds as margin money for acquisition of aircraft will in no way strengthen the balance sheet and consequently the company can never go to the market for funds.``The proposal of the department of expenditure is, therefore, totally at cross purposes with the recommendations of the Kelkar Committee," IA has said.

IA has pointed out that it has continuously improved its performance parametres, including aircraft utilisation and pilot utilisation. The airline has moved from the position of least preferred domestic carrier to the most preferred one.

The company's bottomline has improved from a loss of Rs 258 crore in 1993-94 to a loss of Rs 14.59 crore in 1996-97. IA is expected to record a profit of around Rs 40 crore in 1997-98.