Redefine Finance !!!

 

Civil Aviation Minister Praful Patel met Air India Unions and the management in Mumbai on Wednesday to review its rationalisation and turnaround plan.

The government is likely to infuse additional equity into ailing Air India, which has evolved a major revamp plan to cut costs by Rs 3,000 crore and increasing revenue by Rs 2,000 crore every year.

Addressing the media after the meeting, the minister said, "We have reviewed the functioning of Air India; we met unions and explained government plans to turn the airline around."

"One step would be induction of equity and the other restructuring high cost debt to low cost debt," he told reporters here after holding separate meetings with Air India employees unions and the management.

He assured that the government will infuse equity, but only if there is cost cutting in the airline.

"Air India employees have shown a lot of understanding. It seems management and unions can forge an understand of way forward," he said.

A draft note on equity infusion in Air India, prepared by the civil aviation ministry, is being sent to Cabinet Committee on Economic Affairs (CCEA), Patel said.

He said a series of measures to cut costs and enhance revenues would include returning leased planes and leasing out some new ones.

Air India, which is faced with losses estimated at over Rs 7,200 crore, has undertaken a major revamp plan parts of which have already come into effect, Patel said.

Patel's announcement comes just two weeks after executive pilots of Air India had struck work and gone on mass sick leave protesting cuts in their productivity linked allowances.

Caught on the backfoot , the management had deferred the cut and the government had formed a sub committee of the Air India board to examine the issue. There are 14 unions of pilots, cabin crew, engineers, officers and other employees in the airline.

"Air traffic has improved over the last six months and overall market scenario has definitely witnessed a slight improvement in the last month or two and that does send out a signal of cautious optimism that aviation industry would lead to a road to recovery though it may not be as thick as we witnessed a few years ago," he said.