Air India set to trim wage bill, routes for equity infusion

New Delhi: Air India—the flag carrier operated by National Aviation Co. of India Ltd (Nacil)— trying to make itself look worthy of a $1 billion (Rs4,800 crore) government equity infusion, is seeking wage cuts and pulling out of loss-making routes while making sure flights are full, and generally putting austerity ahead of prestige.
The airline, which made losses of around $1.5 billion last fiscal year, needs the government money to survive as it buys new planes to replace an ageing and depleted fleet to compete with rivals, struggles to integrate its local and international units, and needs to avoid labour strife over reducing a bloated workforce.
It has committed to undertake an overhaul of its business operations, restructure its massive Rs15,241 crore debt and raise funds through a public offering in fiscal 2011 in return for the government rescue in the form of the equity infusion.
On Thursday, Air India’s board meeting in Mumbai, which was expected to finalize wage cuts that have been strongly opposed by unions, was postponed until 23 September.
With the peak winter season ahead, the airline is focusing on tweaking its international operations by introducing new stations and removing those that aren’t economical.
“We are trying to make our (winter) schedule more revenue-oriented and contain losses,” Air India’s executive director Jitender Bhargava said.
For instance, in what will be a first for the carrier, the airline is planning to connect Washington with New Delhi and Boston with Mumbai in the winter schedule that starts in October.
Air India has new Boeing 777-200 LRs currently plying non-stop to New York from New Delhi and Mumbai daily. These services will be extended to Washington and Boston to fill up business class seats with diplomatic and business traffic.
17/09/09 Tarun Shukla/Livemint

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Categories: NACIL Sep 2009