A 7-step action plan to rescue Air India

Mumbai: India’s national carrier had accumulated losses of Rs7,200 crore on 31 March. Salaries were delayed in June because of a severe cash crunch. Borrowings at least doubled to touch Rs15,241 crore in June, from Rs6,500 crore in November 2007. The airline has asked the government to infuse Rs5,000 crore of equity and give a soft loan of Rs10,000 crore to help it stay on course in the midst of violent cross winds.
Arvind Jadhav, a 1978-batch officer of the Indian Administrative Services (IAS) who took charge as chairman and managing director of the government-owned National Aviation Co. of India Ltd (Nacil) in May, has a tough task ahead of him, as he attempts a safe landing for the company that runs Air India.
It will not be easy going. These are tough times for the global airline industry, which is caught in a pincer of high fuel prices and slack demand. Besides, Air India has its own problems: stiff competition from domestic and global airlines that have greater access to the Indian market, poor passenger demand due to the economic downturn, high interest costs because of an ambitious plan to buy new planes, a delay in integrating Indian Airlines and high jet fuel prices.
Jadhav will have to submit a turnaround plan to Prime Minister Manmohan Singh on 25 July.
“One has to take harsh and drastic steps to overhaul Air India. Certainly, this is not going to be an overnight exercise, but it needs to make a turnaround plan that will be followed by a specific business plan,” says a director of Air India. He did not want to be identified.
But just as sharp downturns are common in the global airline industry, smart turnarounds are not unheard of either.
Mint spoke to several management consultants, airline experts and Air India directors to collate a list of seven steps Jadhav and his team need to take on board as they try to steer Air India into calmer climes.
1. Create a crisis. Tell stakeholders the blunt truth.
2. Take drastic steps. “There was never a mega merger without retrenchment of employees, except in the case of Air India and Indian Airlines.
3. Let the leader do the job.
4. Bring in talent from the private sector.
5. Learn from the Satyam experience.
6. New network, new fleet
7. Marketing, yields and revenues.Booz’s Ringbeck says the new management should implement quick ideas to get its customers back and stop losing market share.
21/07/09 PR Sanjay/Livemint

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Categories: NACIL Jul 2009