New Delhi, June 25: Reeling under an unprecedented financial crisis, national carrier Air India was on Wednesday offered a glimmer of hope, as Prime Minister Manmohan Singh assured government support to the airline.
The condition, however, is that it should undertake a comprehensive restructuring process and should become leaner and trimmer.
Civil Aviation Minister Praful Patel, who met Dr. Singh on Wednesday along with top ministry and airline officials, pleaded the case for government support to the carrier. He said the Prime Minister gave it a “sympathetic and patient hearing.”
Addressing a press conference later, Mr. Patel said Air India has been asked to submit its plans for comprehensive restructuring at the earliest before a high-power committee of secretaries, to be headed by the Cabinet Secretary. It would undertake a monthly review of the plans.
“The Prime Minister has said the entire weight of the government is behind Air India. It is a national carrier and it is our pride. But there is conditionality that Air India must put its best foot forward. The employees must realise that there is a problem, and that it is a cumulative problem,” Mr. Patel said.
He said Air India would need to shed flab and undertake a lot of restructuring from within, organisationally, financially and manpower wise. Until serious steps are taken to improve the functioning of the airline and make if financially viable, it would be difficult for the government to back it.
No bailout package yet
However, he did not give any figures for the bailout package, and said Air India must first submit its restructuring plan and proposals. “All figures appearing in the media in this regard are hypothetical and may be based on some sectional views of departments,” Mr. Patel said.
Replying to a query, he said the first set of measures could come after a month, and it could take about two years as a turn-around period for Air India. Mr. Patel said it would not mean “open-ended cheques” from the government.
“Perform or Perish”
While appealing to employees to desist from any plans of a strike, as it would only “hasten Air India’s demise”, he said his message to the 31,000 employees was clear: “Perform or perish.”
Pointing out that the global civil aviation scenario was also “grim”, and international carriers like British Airways were also finding it difficult to put down their losses, Mr. Patel said: “These are extraordinary measures being discussed by the government, and Air India has to come up with equally or more extraordinary measures and live up to the expectations of the government.”
To another question, he said that as an interim measure, the government could give financial assistance at any time, and it could be in any form.
Mr. Patel said the government would reconstitute Air India’s board, bring in independent, eminent persons as directors, and even change or reshuffle functional directors.
On acquisition of new aircraft, he said a majority of jetliners were meant to replace the ageing fleet. “It is a Catch-22 situation; if you continue to fly 20-year-old planes, how will you remain competitive?” While Air India’s equity base is put at Rs.145 crore, the working capital is about Rs.15,000 crores. It runs up a wage bill of Rs.350 crores every month, and efforts are on to reduce it drastically.
–Agencies