Ia Appoints Lovelock Lewes To Recast Profit Centres

Indian Airlines (IA) has appointed Lovelock Lewes to restructure its profit centres.

The financial consultants have been asked to develop an organisational model to facilitate the functioning and growth of profit centres at Central Training Establishment based in Hyderabad, jet engine workshop complex in Delhi, auxilliary power unit in Calcutta and a new cargo unit, which will be set up soon. The consultants have been asked to submit its report by August end.

The consultants were selected by a committee headed by director, planning, G K Agarwal. Lovelock Lewes has been asked to study the cost structure and administration of the airlines profit centres.

The airline is also planning to set up a holding company to manage the profit centres.

The central training establishment has already been spun off as a profit centre and currently trains pilots and cabin crew of both Indian and foreign carriers.

The jet engine workshop carries maintenance checks of the A-320 and B-737 in its Delhi unit while that of the A-300 is carried out in Mumbai. Certain amount of checks are carried out in Hyderabad and Calcutta.

Since May 1996, the major refurbishment of the V2500 engines on the A-320s is being undertaken. So far, 14 such engines have been refurbished. According to an estimate, the airline saves about Rs 40 lakh per engine due to these maintenance checks being carried out in house.

Under its earlier plan, the airline was trying to rope in either Pratt & Whitney, GE or Rolls Royce to form a joint venture to run the jet engine workshop. There was also a move to merge both the jet engine workshops of IA and Air India. The move, however, fell through as Air India decided to go it alone as it didnt have any extra capacity to spare.

Under ninth plan projections, IA is required to make an investment of Rs 4,334 crore during the period. Of this, Rs 188 crore would be towards continuing schemes, representing loan repayments in case of A-320. A total outlay of Rs 2,446 crore is envisaged for the new schemes, of which Rs 2,332 crore is towards acquisition of new aircraft.

A deficit of Rs 500 crore is anticipated between the plan outlay and internal and extra budgetary resources during the plan period.