Mumbai: The government will make an equity investment of Rs 1,200 crore in Air India to help the national carrier tide over initial financial commitments and to also part-finance a turnaround plan, Union civil aviation minister Praful Patel told ET. The investment will be done by June and will be through a single transaction, unlike the conditional equity infusion of Rs 800 crore that the government had invested in Air India last year.
“Air India will have to focus on marketing and the turnaround plan will have to include that aspect,” Mr Patel said, adding that the measures would also include route rationalisation, fleet reduction and lower manpower costs.
The financial crisis of 2008 and rising costs had hit the state-owned Air India’s profitability severely, bringing it to the brink of a collapse, before the government initiated a strict turnaround plan to save thousands of jobs.
Mr Patel, however, refused to discuss the specifics of the plan which is being prepared by Air India’s new management, including the newly-appointed chief operating officer Gustav Baldauf. The plan will need a Cabinet approval.
10/05/10 Manisha Singhal/Economic Times
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