Air India bonus cut move on Sept 18

New Delhi: The fate of Air India's equity enhancement plea rests on the board meeting it may hold over the next three days. The national carrier is yet to decide on the quantum of cuts in the performance linked bonus (PLI) for employees and it cannot go to the government with any demand for equity infusion unless it has decided on PLI.
Top official sources said Air India is expected to convene a board meeting by September 18 to decide on the PLI issue and also the quantum of equity support to be sought from the government. The two issues are linked since the PLI reduction would form a part of the cost-saving measures the Ministry of Civil Aviation would list in the Cabinet note it prepares for getting funds from the government.
Sources also indicated that Air India may have to take more loans for the short term to keep afloat, over and above the current debt of Rs 16,000 crore on its books. They said the airline wants its equity base of Rs 145 crore to be enhanced five times and, even though the government would be willing to support it with equity infusion, fresh loans would have to raised against working capital.
At a meeting of the Committee of Secretaries (CoS) last month, the government had agreed to pump in fresh equity and support the beleagured airline in converting high-cost debt to low-cost debt. But all this was conditional to the airline improving its cost reduction efforts.
16/09/09 Sindhu Bhattacharya/Daily News & Analysis

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Categories: NACIL Sep 2009