Short haul for AI Express COO Arora, as board sacks him

The board of National Aviation Company of India Ltd (Nacil) has decided to sack Pawan Arora, the controversial chief operating officer of Air India Express, the low-cost wing of the national carrier.

The move is a clear reflection of the growing clout of independent directors on the board, who have been clamouring for Arora’s ouster and had discussed the issue separately with Principal Secretary in the Prime Minister’s Office T K A Nair.

Air India’s top management, however, stoutly defended Arora's appointment, saying allegations against him were untrue. The independent directors were brought in by the government to primarily oversee cleaning up of the company’s financial mess and improve operational effeciencies.

“The board neither discussed any of the appointments nor listened to any arguments and asked Arora to leave the airline. Arguments in defence of Arora by AI COO Gustav Baldauf were ignored,” said a source in the airline, who did not want to be identified.

The airline recently appointed Baldauf as COO, Stefan Sukumar as chief training officer and Kamaljit Rattan as chief information officer. “The board cleared the appointments of Baldauf and Rattan, but has asked the airline to review the appointment of Sukumar,” the source added.

The meeting was attended by three of the five independent directors. Anand Mahindra, vice-chairman & managing director of Mahindra & Mahindra, and M A Yusuffali, managing director of Emke Group, did not attend.

Arora’s appointment was embroiled in controversy after details surfaced that he had been removed from the position of test pilot by the directorate-general of civil aviation. That is the reason why the aviation ministry asked the Air India broad to reconsider his appointment. Questions had also been raised over Arora’s flight instructor licence not being renewed.

The board approved the audited financial results for 2009-10 and reviewed the first-half performance. Operating losses decreased by 39 per cent from Rs 5,672 crore in 2008-09 to Rs 3,472 crore in 2009-10 and net losses contracted by 23 per cent from Rs 7,189 crore in 2008-09 to Rs 5,551 crore in 2009-10. The airline carried more passengers in FY10, improving its passenger load factor to 64.8 per cent.

The airline has also shown improved performance in the first half of this financial year. This helped the airline increase yields by 13 per cent and passenger load factor by 67.1 per cent. Cargo revenues were also up by Rs 140 crore.

Among other decisions, the board approved the sale of four Airbus A310 freighters. These aircraft are nearly 20 years old and will release crew and engineering manpower for the new fleet. Air India has 10 freighter aircraft and has dropped plans to continue its cargo subsidiary. It now plans to carry cargo in the belly of passenger planes to increase earnings by 20-30 per cent.