AI seeks to spin off two units, cut salaries

New Delhi: Air India proposes to spin off two units as part of a plan to be sent to the Union cabinet that will also propose wage cuts and set out the financial state of the troubled national carrier, said two civil aviation ministry officials.
Air India wants to turn its maintenance, repair and overhaul (MRO) business and cargo operations arm into separate units, said one of the two officials. The separate balance sheets may lower losses on Air India’s books.
The second official said the plan would be firmed up by the ministry this week. Both officials didn’t want to be named because they aren’t authorized to speak to the media.
The proposed pay cuts may help Air India, run by the National Aviation Co. of India Ltd (Nacil), meet cost reduction targets.
“There has to be a cut, it could mean a saving of Rs500-700 crore depending on the cuts made,” the first official said.
The airline, weighed down by accumulated losses and debt, had in 2006 placed a Rs50,000 crore order for 111 aircraft. It owes Rs16,000 crore towards working capital loans.
09/03/10 Tarun Shukla/Live Mint

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Categories: NACIL Mar 2010