SBI Caps to give AI wings

Mumbai: SBI Caps, the banker mandated by Air India, has submitted a blueprint to save costs of Rs 5,000 crore a year for the beleaguered airline.
The draft has been sent to the Committee of Secretaries (CoS) and the final report will go to the PMO early next month.
An Air India official said SBI Caps has suggested appointing an auditor to monitor costs, apart from shifting offices from rented premises and reduction in the employee cost through measures like having a voluntary retirement scheme (VRS). Among the other measures suggested are having a centralised ticket reservation for non-metros in place of the current practice of having it across locations, in addition to closing down offices at overseas locations where Air India does not operate. These suggestions, if implemented, will help Air India in saving around Rs 1,500 crore. Other measures suggested are a rationalisation of routes and deferring the purchase of new aircraft.
Air India has accumulated losses of Rs 7,200 crore till March 2009. It has a working capital overdraft of Rs 15,000 crore while its fuel and manpower costs are around 60% of its total cost against 45% in case of private airlines. SBI Caps has said Air India could break-even in 2012 if these measures are implemented. SBI Caps was recently appointed to outline plans in the short, medium and long term for the airline. Air India is targeting a reduction in the employee cost of around Rs 500 crore. Its current annual employee cost is nearly Rs 3,000 crore.
27/07/09 Mithun Roy/Economic Times

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Categories: NACIL Jul 2009