Civil Aviation minister Praful Patel on Wednesday said his Ministry would soon approach the Cabinet for equity infusion in the state-owned Air-India.
He however did not disclose the quantum of equity sought.
“The Government” Patel said, “is committed to equity infusion (in Air India) for which we are moving the Cabinet very shortly. The government is also committed to reduce the high-cost debt to low-cost debt with the assistance from banks”. Air India has high-cost debt to the tune of Rs 11,000 crore.
The airline is currently saddled with a debt of Rs 16,000 crore on an equity base of Rs 145 crore. It has been demanding a bailout package from the government, comprising equity infusion and a soft loan. It also has accumulated losses of over Rs 7,200 crore till March 31, 2009.
“A lot of steps have already been taken for cost cutting like route rationalisation,” Patel claimed. As a part of the cost-cutting exercise process the airline is also planning renegotiate the Performance-Linked Incentive (PLI) component of the employees’ wage-packages.
PLI negotiations would be carried out Thursday, when the Air India board meets, he added. A reduction of PLI could mean that the wage bill of the airline, which is now Rs 3,500 crore per year, could reduce by 15 to 20 per cent — an annual savings of Rs 525-700 crore.