AI hive-off plan to be placed before Cabinet next week

New Delhi: After a long wait, the civil aviation ministry is moving a proposal for the formation of two strategic business units (SBUs) – one for ground handling and the other for engineering in Air India – to get Cabinet clearance next week.
“We will wait for the response from various ministries till the end of this week and will send the proposal to the Cabinet next week. The formation of SBUs requires approval from the Cabinet,” said a ministry official, requesting anonymity.
For the engineering subsidiary, the airline is scouting for a global partner. The GH subsidiary will operate in all airports except New Delhi, Hyderabad and Bangalore, where Air India Singapore Airport Terminal Services (AISATS) operates — another JV subsidiary of AI.
The formation of profit-making units and shifting of staff are key components of the turnaround plan. These units will look for business from outside and provide services to Air India at cheaper rates. The GH subsidiary will take 7,465 people and 10,481 people will be shifted to the engineering subsidiary without any change in terms and conditions.
The move will shift a wage bill of Rs 931 crore to the engineering wing and over Rs 600 crore to the GH wing. At present, the annual wage bill of Air India is over Rs 3,100 crore. However, the services provided to Air India by these subsidiaries will come under the tax ambit.
26/08/11 Mihir Mishra/Business Standard

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Categories: Air India Aug 2011