On wings of lead
01 July 1999
"Only God can save Air India," Russi Mody, a former chairman of the airline who is better known for his piloting of the Tata Iron & Steel Company, had said in 1995. Fifty-two-year-old Michael Mascarenhas, Air India's managing director since October 1997, begs to differ. He feels some human intervention is needed too. And the burden of that intervention falls on his shoulders, naturally.
In his five-year term as MD, Mascarenhas has to show that India's Rs 4,015 crore national carrier can be turned around and start showing profits again. Certainly, a sense of urgency exists, since the government has accepted, in principle, the Disinvestment Commission's recommendation on the airline's privatisation, sometime in the near future.
It's a really tough task, by any standards. Years of unwise decisions, lack of planning, ad-hocism and sheer mismanagement have pulled the airline into the red, mired it in a tangled web of problems that would take a gargantuan effort, perhaps combined with a lot of luck, to unravel. Mascarenhas is going about it practically, taking it step by step.
The foremost problem, one that has the airline stuttering on many fronts, is money. Air India has been making losses for four years now, showing a net worth dip of just under Rs 1,000 crore, from Rs 1,375 crore in 1996. Another Rs 3,500 crore, around Rs 1,000 crore of which constitutes working capital loans, weighs it down further. The airline's debt-equity ratio is an alarming 10:1, and employee salaries have been growing by leaps and bounds, even as losses added up.
"Manpower accounts for around 25 per cent of our total costs currently," says Jitender Bhargava, AI's official spokesperson and director - public relations, inflight service & national marketing division. Just check out the rise in salary percentages since 1994! That year saw a hike of 22 per cent, followed by 19 per cent in 1995, 14.44 in 1996, 18.35 in 1997 and 10.8 per cent in 1998-99 -- amounting to Rs 1,122 crore.
Staggering, to say the least! But the management at AI has not lost hope. "We have a track record of profitability for over 36 of our 45 years of existence. We have to get back to profitability again, and we're now seeing light at the end of the tunnel. By the end of this financial year, we see ourselves breaking even on operating costs."