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Air India may slash routes to reduce losses

delhi Updated: Aug 26, 2011 15:49 IST

IANS
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State-run carrier Air India plans to shut operations on several loss-making routes to reduce expenditure and improve cash flow as the company's outstanding liabilities have soared to almost $10 billion, civil aviation minister Vayalar Ravi said Friday.

“Our focus is on reducing expenditure. We are discussing several options, including closing operations on loss-making routes,” Ravi told reporters on the sidelines of a function here.

He said the airline was contemplating to close down operations on the routes where the losses were high.

“We have not yet identified the routes. But it is under consideration,” the minister said.

He said a group of ministers headed by finance minister Pranab Mukherjee has asked the airline to improve its cash flow and reduce losses.

According to official figures, the airline has outstanding liabilities of over Rs.44,000 crore ($9.8 billion), nearly half of which are working capital loans. The debt-ridden carrier has to pay almost Rs.3,200 crore as interest to its lenders.

Ravi said the group of ministers would meet again next month to take some concrete decisions to improve the financial health of the national flag carrier.

“GoM will meet some time next month. We have not decided the date yet,” the minister said.

Asked whether the airline would cut jobs to control losses, Ravi said: “We will not touch staff. There is no question of cutting jobs. We are working on several other measures to reduce expenditure.”

Ravi said the government has replaced the top management of the national carrier and asked the new team to take appropriate measures to improve cash flow of the company.

The government earlier this month appointed Indian Administrative Service (IAS) officer Rohit Nandan as new chairman and managing director of the ailing airline, replacing Arvind Jadhav.