New Delhi, July 1 (IANS) The government Friday dismissed speculation surrounding the future of debt-ridden national carrier Air India, saying that short to medium term measures will help in reviving the airline which was bearing the brunt of stiff competition and rise in fuel prices.
‘The government of India attaches utmost importance to the credible revival of Air India,’ said the civil aviation ministry in a statement, adding that global economic recession and high jet fuel prices were the reasons behind the airline’s slide.
According to the statement, the highly competitive aviation market in the country also made the possibility of an early recovery more difficult.
‘Government of India has taken several steps to tide over the crisis,’ the statement said mentioning that the government in the federal budget 2011-12 had allocated Rs.2,000 crore for the airline and that another Rs.1,200 crore was expected to be infused this year.
Currently the airline, which is laden with a cumulative debt of Rs.40,000 crore it incurred over aircraft acquisition and as short-term loans to maintain its operations, expects a fresh equity infusion of Rs.1,200 crore in July.
The cash-strapped carrier is also seeking a total infusion of Rs.17,000 crore, which includes Rs.5,000 crore for this fiscal year alone.
Earlier, the government had infused Rs.4,000 crore in the previous two fiscal year. The airline was also promised another tranche of Rs.2,000 crore this year in the federal budget.
Regarding the airline’s human resources (HR) issue, the statement said that the government had formed a committee headed by retired Justice Dharmadhikari which will submit a report on the ways to address these issues.
Recently the airline suffered a 10-day strike called by erstwhile Indian Airlines pilots who were demanding pay parity with their colleagues in Air India since the two airlines merged into a single entity. The impasse caused cancellation of a total 1,600 flights and a revenue loss of Rs.150 crore.
The statement further said that the airline’s MRO (maintenance, repair and overhaul) and ground handling businesses are being hived off.
‘This would help Air India focus on tapping the considerable business potential of these markets (segment),’ the statement further said.
Air India’s turnaround plan (TAP) and financial restructuring plan (FRP) which has been prepared by SBI Caps, are under review of a group of ministers (GoM) headed by Finance Minister Pranab Mukherjee, said the statement.
The GoM is expected to meet on July 18.
Meanwhile, Prime Minister Manmohan Singh has said that he has asked the ministerial group overseeing the turnaround of the debt-ridden national carrier to come out with their recommendations fast.
‘I will request (Finance Minister) Pranab Mukherjee to take expeditious decisions in the (Air India turnaround) matter,’ the prime minister told a group of editors from the print media Wednesday.
The plan envisages further equity inclusion, conversion of short-term loans into long-term debt and hiving-off the company’s maintenance and ground-handling arms.
‘All these short term and medium term measures are expected to make Air India a robust and competitive airline,’ the statement added.
