AI employee costs will have to come down by at least Rs800 crore: Patel
15 October 2009
Mumbai: In a bid to qualify for a government bailout of atleast Rs5,000 crore, Air India will have to bring down operating costs by Rs3,000 crore and generate revenues of Rs2,000 crore. This was made clear to Air India employees on Wednesday by the civil aviation minister Praful Patel.
Patel pointed out to employees that of the overall costs of Rs3,000 crore atleast Rs800 crore will have to come from reduction in employee costs.
''The government's support (equity infusion of Rs5,000 crore) comes with a condition that we will cut costs,'' civil aviation minister Praful Patel said.
''We have to generate Rs800 crore from employees' costs and that is the only hurdle for the airline from getting the government's help,'' Patel informed union representatives at a meeting. ''You have to do it any which way and I am flexible if you come up with alternative measures.''
The carrier has over 14 employee unions who represent over 25,000 of the airline's 31,000-strong workforce.
''It is a well known fact that Air India's load factor is less than other airlines and an increase of 6-7 per cent in load factor can lead to a substantial jump in revenues for which they (Air India) will have to improve their marketing and services," Patel told reporters after the meeting.