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AI asked to give restructuring plan
NEW DELHI, JUL 2 (PTI/IANS):
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Published on 2 Jul. 2009 11:52 PM IST
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The borrowings of Air India, which is facing a severe financial crunch, have more than doubled in less than two years and the airline has been now asked to prepare a restructuring plan in the next 30 days. “The airline has been facing a financial crunch for the past few years. The borrowings of Air India have risen steeply from Rs 6,550 crore in November 2007 to Rs 15,241 crore in June this year,” Civil Aviation Minister Praful Patel told Lok Sabha today. In reply to a question, he said the borrowings have gone up largely due to servicing of debt on account of purchase of new aircraft and its operating losses which have compounded due to the present economic recession and the high oil prices last year. He said the National Aviation Company of India Limited (NACIL) has been advised to formulate “a concrete proposal for equity induction and provision of loans”.Patel also made it clear that there was no plan to retrench any employee of Air India.He later told reporters outside Parliament that government’s support to Air India “cannot be taken for granted” and it should prepare a restructuring plan in the next 30 days. “It cannot be open ended. Government is committed...We want a strong national carrier.” Patel said there was “every reason for Air India to respond quickly. The management, the employees, all will have to come out with a proper restructuring plan”. The government, he said, wanted to know “what is needed to be implemented in the coming weeks and years”. The Minister said Air India was appointing SBI Caps as a consultant to carry out its financial restructuring plans. To a question on whether government proposed to allow foreign airlines to invest in domestic carriers, Patel said, “The proposal to allow foreign airlines to invest in domestic airlines is under examination.” AI won’t pay salaries July 3 The Air India management Thursday backtracked on its commitment to the employees’ union to pay staff salaries by July 3, pushing employees to threaten again that they would go on strike from Friday. Yielding to pressure from its employees, the cash-strapped national carrier had June 29 said it would pay the June salaries July 3, instead of July 15 as had been decided earlier. Undeterred by the strike threat, Air India has said it would deal with the situation. “We are working it out. We cannot be held at ransom,” a spokesperson told IANS. A senior member of the Air Corp Employees’ Union (ACEU) - the largest union in the company with over 23,000 members from the 31,000 employees with the carrier - said the carrier’s staff would go on strike from Friday. Air India is in a financial mess having incurred a loss of Rs.4,000 crore last fiscal. Civil Aviation Minister Praful Patel has approached Prime Minister Manmohan Singh for a Rs.10,000-crore (about $2-billion) bailout package for the beleaguered carrier. The prime minister in turn suggested that National Aviation Co of India Ltd (NACIL), which owns Air India, take cost-cutting measures to improve its financial condition.

 
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