AI revamp to include equity infusion of Rs5,000 crore: Patel
15 Oct 2009
Mumbai: Civil aviation minister Praful Patel said here Wednesday that national carrier, Air India, will require a major revamp, including the infusion of additional equity of around Rs5,000 crore. Addressing reporters after separate meetings with the Air India management and representatives of staff unions, Patel said revamp of operations would include annual cost reductions of Rs3,000 crore and generation of additional revenue of Rs2,000 crore.
Air India posted losses of Rs7,200 crore last fiscal.
Patel said that the government would help the carrier only if it cut costs drastically and at the same time, generated additional revenues that would put it on the path to recovery in a few years. Patel made it clear that it would be difficult for the carrier to survive without these measures.
While the Cabinet Committee on Economic Affairs is already considering a proposal for equity infusion, cost-cutting measures would include retiring leased aircraft and leasing out some of the new ones.
Patel also said the airline had deferred delivery of six new Boeing 777 aircraft by two years. It had also shelved plans to take on lease new aircraft, including long-range Boeing 777.
"Air traffic has improved over the past six months and there is a slight improvement in the overall market scenario in the last couple of months - the aviation industry appears headed on a road to recovery," the minister said.
Patel also described as "positive" his meetings with representatives of the carrier's 14 unions and said they appreciated the airline's problems.
