Praful Patel reviews steps to restructure Air India

New Delhi, Jan 15 (PTI) Weeks after the government decidedto infuse additional equity of Rs 1,200 crore in Air India,steps taken by its management to restructure the nationalcarrier came in for a thorough scrutiny by Civil AviationMinister Praful Patel here today.

Apart from its financial restructuring, the Minister isunderstood to have reviewed the progress in implementation ofcost-cutting measures by the airline top-brass in variedfields -- ranging from the upkeep of its lounges and groundhandling to crew shortage.

This was the fifth meeting Patel had with Air Indiaofficials in the past three months to undertake micro-management of the airline''s restructuring process.

Sources said the financial restructuring plan prepared byconsultancy firm Deloitte Touche Tohmatsu India Limited cameup for a detailed scrutiny at the meeting, which was alsoattended by Civil Aviation Secretary SNA Zaidi, Air India CMDArvind Jadhav and Chief Operating Officer Gustav Baldauf.

The review came ahead of the presentations the managementwould make before Air India Board on Wednesday next and laterto the Finance Ministry and the Board for Reconstruction ofPublic Sector Enterprises (BRPSE) to justify its claims forgovernment funding.

The progress in making the airline''s Strategic BusinessUnits functional was also reviewed at the meeting, the sourcessaid. The SBUs would be separate profit centres which wouldindependently handle activities like ground handling,maintenance, repair and overhaul, and engineering.

The Minister also asked the airline management what stepsit had taken to overcome the shortage of both cabin andcockpit crew, which has led to several flights being delayedor cancelled in the past few weeks, the sources said.

The full board of Air India would meet next week to reviewthe proposals of ICICI, Standard Chartered and SBICaps torefinance the airline''s USD 1.15 billion loan, given by aconsortium of banks led by IDBI, to fund acquisition of 21Airbus A-321 aircraft.

Air India has been trying to find ways to lower interestrate on this loan by at least two per cent by securinggovernment guaranteed convertible bonds, an issue on which theFinance Ministry is likely to take a final decision.

The ailing national carrier has been asked by the BRPSE tocome up with a financial restructuring plan to drastically cutlosses.

Air India has been working on details for a revivalpackage, which would have to be vetted by the BRPSE, whichrecommends steps to the government and the concerned loss-making state-run unit on ways in which it could strengthen,modernise and review itself.

After getting a cash infusion of Rs 1,200 crore inDecember, Air India, which has accumulated losses over Rs5,500 crore, is likely to seek another Rs 2,000 crore worth ofequity infusion in the next financial year.