IATA hails Indian govt's bailout for AI

I / Geneva December 16, 2009, 16:41 IST

Welcoming the Indian government's move to infuse equity in Air India, the IATA today said such support should be a "one-time shot" that should be followed up by an effective restructuring programme to ensure that the airline comes out of red.

"The airline industry as also Air India is down as a business. We normally do not support bailouts. But giving funds to meet an emergency situation is alright. However, it should be a one-time option," International Air Transport Association (IATA) director General and CEO Giovanni Bisignani told PTI in an interview here.

The government has recently decided to infuse equity worth Rs 800 crore in the first tranche into Air India, which has a paid-up equity base of just Rs 145 crore but has ordered aircraft worth Rs 40,000 crore.

The chief of the Geneva-based IATA said that the airline, as a follow up, should work on a "strong, effective restructuring programme so that it is able to run on its own leg".

"Once the market has been opened up, you have to give the national carrier a chance to compete. In some cases it is okay to give money in an emergency situation especially if it is linked to major restructuring as is happening in Air India," Bisignani said.

To questions on the problems facing the airline, which recently witnessed a strike by its pilots and strike threats by other sections of its staff, Bisignani said "an emergency situation demands that all sections tighten their belts and give up some things".

In this context, Bisignani, who once headed Alitalia, referred to a situation facing the official Italian airline, saying it was forced to sack 5,000 workers while those left on the pay-rolls were forced to take a 30 per cent pay cut.

Referring to the merger of Air India and Indian Airlines over three years ago, the IATA DG said that although the merger process has taken "a bit too long" but the "painful exercise has to be carried out" so that the merged Air India survives and flourishes.

Noting that the new management has taken over the ailing Indian carrier six months ago, he said it has to push the restructuring plan right ahead and "reset some of its problems so that we can see Air India flying in the blue sky" by June next year when the IATA goes for its annual general meeting.