Air India expects to turn around within six months
State-run carrier Air India, reeling under heavy losses, expects to turn around within the next six months through a combination of expenditure control and revenue enhancement measures.india Updated: Jul 17, 2009 21:16 IST
State-run carrier Air India, reeling under heavy losses, expects to turn around within the next six months through a combination of expenditure control and revenue enhancement measures.
SBI Caps, the consultants mandated to present a restructuring plan, will make a presentation to the airline’s management on Tuesday.
“The management will discuss the plan with the ministry the next day and it will be taken to the committee of secretaries two days later,” an official, who did not wish to be identified, said.
National Aviation Company of India Limited (Nacil), which was formed by merging domestic carrier Indian Airlines with Air India two years ago, is considering a proposal to extend its low fare services to some domestic routes to compete with private carriers.
“In order to compete effectively with other domestic low fare carriers, and to get a share of the low fare market segment, Air India is considering a proposal to extend low fare services to some of the domestic routes also,” civil aviation Minister Praful Patel informed Lok Sabha in reply to a question on Thursday.
An official said the airline expects to strengthen its bottomline by about Rs 3,000 crore through internal accruals, cost cutting measures, route rationalisation, return of leased aircraft, manpower rationalisation and deferring deliveries of new aircraft.
The airline’s management is pitching for a Rs 3,000 crore soft-loan from the government.
Oil marketing companies have also been asked to extend credit facilities for jet fuel supplies to the embattled airline that is estimated to have clocked losses of Rs 7,200 crore, in 2008-09.
“The airline needs to have a restructuring plan ready in the next six to eight months which will then give them an idea of the extent of cash bailout they would require,” said Kapil Kaul, chief executive officer of Centre for Asia Pacific Aviation.
“The airline should be put under a special administration to have a well-structured revival plan in place,” Kaul said.