The Committee of Secretaries formed to monitor the turnaround plan of Air India today asked the civil aviation ministry to move a proposal on the financial restructuring of the airline to the Cabinet in consultation with the finance ministry.
With this, the financial restructuring of the beleaguered airline has reached the final lap. National Aviation Company of India, which runs the airline, has asked for fresh equity infusion and conversion of high-cost debt into low-cost debt, for which it needs a letter of comfort from the government, to turn its fortunes around.
| WHAT AI NEEDS |
| Equity Infusion of over Rs 3,000 crore |
| Conversion of high-cost debt to low-cost |
| Lower rentals for aircraft taken on lease |
| Relocation to a new office from its headquarters in Mumbai |
| Lower wage bill by reducing PLI |
The airline has an equity base of Rs 145 crore. It has debt of Rs 16,000 crore on its books. Out of this, around Rs 10,000 crore is high-cost debt. NACIL has placed orders for 111 new aircraft worth Rs 45,000 crore. It had accumulated losses of Rs 5,000 crore by the end of 2008-09. Its current operations are also incurring losses to the tune of Rs 200 crore per month.
This was the second meeting of the committee. It is chaired by Cabinet Secretary KM Chandrasekhar and includes Aviation Secretary MM Nambiar, Finance Secretary Ashok Chawla and Principal Secretary to the Prime Minister TKA Nair.
The committee took stock of the various measures taken by the airline management to cut costs and asked the management to resort to aggressive cost-cutting measures in some areas.
“The committee is satisfied with the way we are moving forward and with the cost-cutting measures,” said a NACIL spokesperson. He added the airline will save around Rs 1,000 crore this year. The airline plans to cut cost through every possible way. It wants to reduce lease rentals, increase operational efficiency and move out of the Air India headquarters at Nariman Point in Mumbai.
The airline has offered a 50 per cent cut in the productivity-linked incentive (PLI) to its employees and is trying to convince the unions. If the unions agree, the airline will be able to save Rs 620 crore per annum. It has a wage bill of Rs 3,100 crore, of which the PLI component is 40 per cent.
