Govt to refer AI to PSU recast board

New Delhi: Facing serious doubts over debt-ridden Air India management's turnaround plan from within the government, the aviation ministry has agreed to consult the Board for Reconstruction of Public Enterprises (BRPSE) on the revival of AI.
The ministry is likely to send critical parts of the turnaround plan, including the hyper sensitive wages and integration fronts, to the board in the next fortnight.
Maintaining that the national carrier is not terminally sick and would be restored to health, highly placed sources said: "Deloitte is vetting the turnaround plan on behalf of SBI Capital. This process should be over maximum by next week. Parts of the plan regarding pay scales, integration and issue of parity of wages for employees of the merged entity would be consulted with the BRPSE. The government is committed to turn around AI and there is no question of being declared sick."
AI originally had an equity base of Rs 145 crore when UPA-I placed order for 111 new aircraft worth Rs 55,000 crore and merged AI and Indian Airlines. Thanks to some questionable decisions and then the long recession in the West and slowdown back home, the Maharaja is today saddled with a life-threatening high cost debt of Rs 40,000 crore along with mounting losses.
AI's equity base will be Rs 2,145 crore very soon (the government infused Rs 800 crore last fiscal and the balance Rs 1,200 crore will come now). While Rs 2,000 crore will come in the next fiscal, another Rs 1,000 crore will come in the financial year after that, taking the equity base to Rs 5,145 crore. The corporate debt restructuring will reduce debt burden by half through a mix of moratorium and conversion to long term.
11/01/11 Saurabh Sinha/Times of India

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Categories: Air India Jan 2011