Air India's mountain of debt root of all problems: Ashwani Lohani on FB

Through a Facebook post Lohani admitted that the debt acquired by Air India is insurmountable

In 2014, barely two months after the Narendra Modi government took charge, the Prime Minister’s Office (PMO) called a meeting to discuss the possibility of Air India advancing its revival by two years and subsequently going in for a stake sale. Three years later, despite some improvements, the state-owned carrier continues to struggle financially and is unlikely to achieve its target of making a net profit in FY19. 

 

Despite lower fuel prices and higher passenger numbers, accumulated debt stood at Rs 46,000 crore and in April the airline took loans to pay salaries to its 16,000 employees. 

 

Through a Facebook post, chairman and managing director Ashwani Lohani on Sunday admitted that the debt acquired by Air India is at the root of all problems for the company.

 

Lohani said Air India went down due to the ill fated decision of the merger of two organisations that were not destined to be, couple with many other wrong decisions, of the earlier regime.

 

This is not the first time, Lohani pointed this out. Last year, in an interview to Economic Times, Lohani said the biggest reason for the downfall of this airline was the merger between erstwhile Air India and Indian Airlines, which was done despite the fact that both carriers are totally opposite of each other. There were many differences between the two companies in terms of work culture, areas of operation, compensation, working conditions, entitlements etc. The merger resulted in massive discontent and frustration amongst the staff.

Here is te full text of Ashwani Lonhani's Facebook post:

There have been a spate of articles on Air India recently. While the grim financial; scenario cannot be denied or wished away, it indicates a gross lack of understanding of the issue on the part of many armchair critics to unfairly blame the company or its employees for the same. Air India went down due to the ill-fated decision of the merger of two organisations that were not destined to be, couple with many other wrong decisions, of the earlier regime. Of course, gross mismanagement at the senior management levels of the company played its part in the rapid downward slide too, but isn't appointing senior management functionaries the function of the governments? It needs appreciation that Air India always had and still has the finest set of employees be it the pilots, cabin crew, engineers or the rest. Yet the mountain of debt that we acquired appears insurmountable and is at the root of all the problems that manifest as symptoms to all and sundry.

While making Facebook users agree with Lohani, there are many who hold strong objections. Here are some reactions to his post






Make more efforts to recover dues for VVIP missions

 

While Ashwani Lohani has sought another round of debt restructuring to reduce its annual interest outgo ofRs 4,000 crore to help with its revival, Comptroller and Auditor General (CAG) has asked the Government and Air India Limited (AIL) to make more efforts to recover the money spent on VVIP chartered flights.

 

"The outstanding bills on account of the chartered VVIP flights, maintenance of the aircraft and evacuation missions by the External Affairs Ministry (MEA) remained at Rs 451.75 crore as on March 31, 2017 with some bills dating back to 2006," the letters in response to the RTI query said.

 

They said Rs 47.37 crore was pending towards six visits of the prime minister to the United States, African countries, Uzbekistan, Vietnam and Thailand between November 9, 2016 and February 10, 2017.

 

"Bills of Rs 206.19 crore towards 22 visits of the vice president between June, 2008 and March 18, 2017 are still pending with the MEA," they said.

 

Additional bills of Rs 145.63 crore towards the maintenance of Boeing 747-400 aircraft in 2013, 2014, 2015 and 2016 for the vice-president's flights are yet to be cleared by the ministry, they said.

 

Modi government's claims of Air India profit

 

The Centre claimed that Air India had posted an operating profit of Rs 105 crore in FY 2015-16. However, the country's CAG has disputed the figure saying the national carrier had in fact incurred a loss of Rs 321 crore.

 

In fact, records show that Civil Aviation Minister Ashok Gajapathi Raju had to intervene to recover the pending dues.

 

In his letter dated December 21, 2015 to Finance Minister Arun Jaitley, Raju had said Air India was operating under Turn Around Plan and Financial Restructuring Plan approved by the Cabinet Committee on Economic Affairs (CCEA) for its financial and operations turn around.

 

"However, despite improvement in many of its parameters, it is still incurring losses and is facing financial crunch," he had said.

 

The minister had requested Jaitley's intervention in ensuring that the dues of all the four ministries were released to Air India."

 

Air India: Privatisation an option?

 

Experts outside and inside the government have repeatedly said that revival can only happen after privatisation. "Best is to let the market decide. A good move, which is in the national interest, shouldn’t be held back due to a perceived risk of failure,” he said to ET. "If no one bids, that too is a good market feedback. We can always go back to the drawing board and make the deal sweeter. There’s a low possibility of that happening through. However, BJP leader Subramanian Swamy is not in favour of this. Commenting on a report published in ET, Swamy tweeted: Rubbish! Who is the buyer? Spice Jet?