Air India Aims to Turn Profitable in Three Years

Air India, the state-run carrier with $1.5 billion of accumulated losses, said it will create four business units, slash capacity and pay debt to turn profitable in three years.
Cargo, engineering services, ground handling and airline operations will be separate divisions, Chairman and Managing Director Arvind Jadhav said today in New Delhi. The number of employees will be “rationalized,” he said without elaborating.
Air India, seeking state funds, must reorganize after the government asked it for a “time-bound program” as part of conditions for the rescue package. The carrier delayed June salaries to its 32,000 employees and plans to cancel aircraft orders after traffic slumped and debt mounted.
The cost-saving measures will “be painful,” Jadhav said. “We’ve got into a cash-flow problem. We are unable to service our interest and debt liabilities with our internal resources.”
The focus in the first nine months of the reorganization will be “survival,” Air India said in a statement posted on its Web site. The units will be started in the next nine months and the carrier will aim to turn around in the following 18 months and prepare for an initial public offer.
07/08/09 Vipin V. Nair/Bloomberg

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Categories: NACIL Aug 2009