A-I to get Rs 2,000-cr equity infusion

New Delhi: The civil aviation ministry has moved a proposal to infuse Rs 2,000 crore of equity by December as the first phase of financial restructuring to bail out ailing Air India (A-I) with some riders. Currently, A-I has an equity capital of only Rs 145 crore and debt of over Rs 16,000 crore.
The plan is to stagger the infusion of Rs 5,000 crore of fresh equity in the next few years, a senior government official said confirming the development.
The riders include a more aggressive plan for cost cutting that would involve restructuring the contentious productivity-linked incentive pay and a voluntary retirement scheme to shed flab. The carrier has an employee strength of around 32,000.
The airline has also been directed to pick up elements from the turnaround strategy of other international carriers like Malaysian Airlines and Chile Air. A proposal for the specific financial restructuring will be placed before the Cabinet soon for its approval. Last week, the Committee of Secretaries (CoS) under the chairmanship of cabinet secretary K M Chandrasekhar asked A-I to go in for more aggressive cost-cutting measures, though it was satisfied with the measures taken till date.
08/09/09 Business Standard

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Categories: NACIL Sep 2009