INDIA: Air India bail out, but with conditions

The Indian government has said it will help bail out the ailing state-owned carrier, Air India, but said it must restructure and cut costs and asked the National Aviation Company of India Ltd (Nacil) to present a restructuring plan for Air India within 30 days. The restructuring would include infusion of equity, a possible voluntary […]


Air India bail out Indian Airlines Nacil Praful Patel restructuring plans



The Indian government has said it will help bail out the ailing state-owned carrier, Air India, but said it must restructure and cut costs and asked the National Aviation Company of India Ltd (Nacil) to present a restructuring plan for Air India within 30 days.

The restructuring would include infusion of equity, a possible voluntary retirement scheme to reduce the current 31,000 head count, independent directors on the board and a rejig of top management to get the ailing state airline out of its mess.

The plan would also include substantial reduction of costs and a time-bound implementation of the integration – both of manpower and the IT system – between Indian Airlines and Air India, which has already been delayed for months.

“The government will not let the company go down and is committed to see it does not go sick but that does not mean it will give them an open-ended cheque. The company has to become leaner, trim their manpower, the top management will be restructured and independent directors will be appointed,” said Aviation minister Praful Patel.

The ministry also pushed for reduction of sales tax on aviation turbine fuel (ATF), which constitutes nearly 40 per cent ofan airline’s operating cost.