Praful Patel reviews steps to restructure Air India

Praful Patel reviews steps to restructure Air India

Apart from its financial restructuring, the Minister is understood to have reviewed the progress in implementation of cost-cutting measures by the airline top-brass in varied fields -- ranging from the upkeep of its lounges and ground handling to crew shortage.
This was the fifth meeting Patel had with Air India officials in the past three months to undertake micro- management of the airline's restructuring process.

Sources said the financial restructuring plan prepared by consultancy firm Deloitte Touche Tohmatsu India Limited came up for a detailed scrutiny at the meeting, which was also attended by Civil Aviation Secretary SNA Zaidi, Air India CMD Arvind Jadhav and Chief Operating Officer Gustav Baldauf.

The review came ahead of the presentations the management would make before Air India Board on Wednesday next and later to the Finance Ministry and the Board for Reconstruction of Public Sector Enterprises (BRPSE) to justify its claims for government funding.

The progress in making the airline's Strategic Business Units functional was also reviewed at the meeting, the sources said. The SBUs would be separate profit centres which would independently handle activities like ground handling, maintenance, repair and overhaul, and engineering.

The Minister also asked the airline management what steps it had taken to overcome the shortage of both cabin and cockpit crew, which has led to several flights being delayed or cancelled in the past few weeks, the sources said.

The full board of Air India would meet next week to review the proposals of ICICI, Standard Chartered and SBICaps to refinance the airline's USD 1.15 billion loan, given by a consortium of banks led by IDBI, to fund acquisition of 21 Airbus A-321 aircraft.

Air India has been trying to find ways to lower interest rate on this loan by at least two per cent by securing government guaranteed convertible bonds, an issue on which the Finance Ministry is likely to take a final decision.

The ailing national carrier has been asked by the BRPSE to come up with a financial restructuring plan to drastically cut losses.

Air India has been working on details for a revival package, which would have to be vetted by the BRPSE, which recommends steps to the government and the concerned loss- making state-run unit on ways in which it could strengthen, modernise and review itself.

After getting a cash infusion of Rs 1,200 crore in December, Air India, which has accumulated losses over Rs 5,500 crore, is likely to seek another Rs 2,000 crore worth of equity infusion in the next financial year.

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