Air India gets Rs1200 cr equity infusion
31 December 2010
The government yesterday approved the infusion of the second tranche of equity of Rs1,200 crore for the ailing Air India with the proviso that its management rationalise the wage structure of its over 25,000 employees.
Announcing the decision of the cabinet committee on economic affairs (CCEA) for further equity infusion, civil aviation minister Praful Patel said, "This will not only help restructuring the airline, but will also shore up its finances."
The first tranche of equity infusion of Rs800 crore was made in February this year for the national carrier's revival plan. "The infusion of enhanced equity fund would give the much needed impetus to Air India for its revival plan", an official statement said.
Sources said the equity infusion was being made in a phased manner as it was based on the performance parameters of Air India.
The official statement said the CCEA, while granting additional equity, "directed Air India management to work towards rationalisation of wage structure". With the CCEA directive aimed at cutting costs, the National Aviation Company of India Ltd (NACIL), Air India's holding company, received the official nod to go ahead with its plans to review and re-negotiate all agreements with its 14 unions.
Two of these unions were de-recognised following a flash strike three days after the 22 May plane crash in Mangalore this year. At present, there are 10 wage agreements signed between these unions and the management.