Govt asks SBI Cap to review AI's Turnaround Plan

The government has asked SBI Capital Markets to review Air India's Turnaround Plan (TAP) and submit a report to it within three months, a move which comes following "drastic changes" in the ground situation in the last three years.
SBI Capital Markets, which is the investment banking arm of public sector lender SBI, has been asked by the Civil Aviation Ministry to carry out a thread bare analysis of TAP, which the erstwhile UPA dispensation had approved for the carrier in 2012, entailing a Rs 30,000 crore bailout package with certain riders, sources said today.
"The Ministry feels that the situation in the aviation industry has undergone sea change since 2012 when Air India's TAP was put in place for ten years and this requires a revisit of the plan," they said.

The SBI Cap has been mandated for this purpose and would submit it reports in three months to the government on the way forward for the national airline, they said.
Also, an Air India Board member had, in April, pitched for a complete re-look of the plan, citing changing micro-economic situation. "What you actually need is a complete re-look at the airline's revival plan," an Air India Independent Director had told PTI.
The government had come to the rescue of the carrier on the conditions that it would achieve certain targets in absolute numbers like seat factor, number of aircraft in the fleet, on-time performance and revenue among others in each year, the sources said, adding that the carrier has not yet met most of these "milestones."

"Moreover, the plan had not envisaged the Jet-Etihad deal as well the entry of new operators like AirAsia India and Vistara on the horizon as well as the oil prices, which declined by 39 per cent also fiscal," they said.
Besides, the delay in the creation of two separate subsidiaries - one for the engineering and MRO and other for the ground-handling - have also resulted in Air India failing to achieve the desired results, the sources said.
"Even the asset monetisation programme, under which the national carrier was expected to mop up Rs 5,000 crore over a year's horizon has not yet taken off. At the same time, the induction of the narrow body 320 planes in the fleet was also delayed," sources said.