Financial status of Air India reviewed

Posted By: Pti
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New Delhi, Feb 5 (PTI) The financial status ofcrisis-ridden Air India and its subsidiary Air India Expresscame up for review by Civil Aviation Minister Vayalar Ravihere today.

Ravi was briefed by top officials about steps taken by theailing national carrier on financial restructuring after thegovernment infused additional equity of Rs 1,200 crore inDecember, official sources said.

Air India, which has accumulated losses over Rs 5,500crore, is likely to seek another Rs 2,000 crore worth ofequity infusion in the next financial year and the proposalmay form part of the Union Budget, they said.

The Minister is understood to have reviewed the progressin implementation of the various cost-cutting measures,ranging from the upkeep of its lounges and ground handling tocrew shortage.

Besides its financial performance, the airline officialsare understood to have also raised the contentious issue ofwage rationalisation of over 26,000 employees. However, whattranspired on the subject could not be ascertained.

The situation facing Air India Express and its decision toshift its headquarters to Thiruvananthapuram also came up fora review.

Sources said the financial restructuring plan prepared byconsultancy firm Deloitte Touche Tohmatsu India Limited wasalso scrutinised at the meeting, which was attended by all topairline officials, including Air India CMD Arvind Jadhav andChief Operating Officer Gustav Baldauf.

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 airline has also to brief the Board for Reconstructionof Public Sector Enterprises (BRPSE) to justify its claims forgovernment funding. Incidentally, the BRPSE falls under theHeavy Industries and Public Enterprises Ministry which is nowheaded by former Civil Aviation Minister Praful Patel.

A presentation was also made on the progress in making theairline''s Strategic Business Units functional, the sourcessaid. The SBUs would be separate profit centres which wouldindependently handle activities like ground handling,maintenance, repair and overhaul, and engineering.

The airline, on its part, has maintained that it hasposted an operating surplus for the second month in a row withflights to 106 out of 179 destinations registering cash profitin December. It registered Rs 49.48 crore worth of operatingsurplus as against Rs 21.66 crore in November.

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