Govt will help, but Air India must also cut costs: PM

New Delhi: The government has asked the National Aviation Company of India Ltd (Nacil) to present a restructuring plan for Air India (A-I) which would include infusion of equity, a possible voluntary retirement scheme (VRS) to reduce employees (31,000 strong), independent directors on the board and a rejig of top management to get the ailing state airline out of its mess.
The plan would also include substantial reduction of costs and a time-bound implementation of the integration — both of manpower and the IT system — between Indian Airlines and Air India, which has already been delayed for months.
The A-I management has been asked to prepare the restructuring plan within 30 days and present it before a committee of secretaries headed by the cabinet secretary.
Aviation minister Praful Patel today met Prime Minister Manmohan Singh, together with Nacil chairman Arvind Jadhav and civil aviation secretary M Madhavan Nambiar and made a presentation. The ministry has also pushed for reduction of sales tax on aviation turbine fuel (ATF), which constitutes nearly 40 per cent of an airline’s operating cost.
Patel later in a press conference said the PM assured full support of the government, but with the condition that the airline also has to take simultaneous measures to combat its financial mess.
“The government will not let the company go down and is committed to see it does not go sick but that does not mean it will give them an open- ended cheque. The company has to become leaner, trim their manpower , the top management will be restructured and independent directors will be appointed,” said Patel. He also appealed to employees not to go on a strike because of a 15-day delay in payment of their salaries, as that would worsen the situation.
Giving some examples of the flab and the distorted emolument structures, Patel said AI has over 1,000 employees working in its canteen services. He also said a technician gets a salary of Rs 50,000 a month but Rs 1.3 lakh as performance-based incentive payment.
The minister said a notification permitting government servants to fly private airlines might be scrapped.
25/06/09 Business Standard

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Categories: NACIL Jun 2009