No job cuts, Air India recovering: Praful Patel (Lead)

July 25th, 2010 - 11:06 pm ICT by IANS  

Mumbai, July 25 (IANS) National carrier Air India is on the path of strong recovery and there would be no job or wage cuts, Minister of State for Civil Aviation Praful Patel said Sunday.
“Air India’s traffic revenue went up by Rs.638 crore - passenger revenue by Rs.546 crore (up 28 percent) and cargo revenue by Rs.92 crore (up 61 percent) - over the corresponding quarter (Q1) last year thus reflecting a rebound in traffic,” Patel said.

“The government is committed to the national carrier. Infusion of funds is subject to Air India showing that it wants to come out of the problems they are facing,” Patel said, at a review meeting.

An Air India team, headed by Chairman and Managing Director Arvind Jadhav, also made a presentation on the plan for financial restructuring and turnaround till 2014-2015 before the board of directors, making an announcement that the operations will break even by 2015.

Under the restructuring plan, the national carrier will get working capital loans through a mix of bonds guaranteed by the government with longer tenor and bullet payments.

The company may also sell or lease land and building to raise working capital. Apart from this, there will be equity infusion by the government to strengthen the Air India balance sheet.

The national carrier’s passenger load factor in Q1 on the domestic sector was 75 percent vis-a-vis 67 percent last year and that on the international sector was 66 percent vis-a-vis 62 percent last year.

Patel said that the national carrier is on the path of strong recovery and that the yield has gone up by 14 percent.

“There would be no job or wage cuts,” he said.

Patel mentioned that the financial performance of Q1 was offset by factors like increase in fuel costs. “The fuel cost was increased by Rs.396 crore, mainly due to 33 percent price increase in fuel prices,” he said.

Speaking about the financial restructuring plan, Jadhav said: “We are expecting to have a positive balance sheet within 2014-15.”

Mahindra group vice chairman and newly appointed independent director Anand Mahindra said: “After meeting up with the union leaders, we have got a strong commitment from them and are very pleased with the reactions we have received.”

Federation of Indian Chambers of Commerce and Industry (FICCI) secretary general and another independent director Amit Mitra said that the meeting with trade unions was “an eye-opener and that the carrier’s human capital will drive the initiative”.

The turnaround plan also highlighted the national carrier’s “corporate mission to deliver the highest quality of service around the world and be the epitome of Indian hospitality”.

The carrier also aims to fly 25 million domestic passengers and 15 million overseas passengers by 2015. Air India has, this year, received funding of Rs.1,200 crore against Rs.800 crore last year.

The carrier aims at achieving operational restructuring goals including achieving 75 percent load factor with a target passenger revenue of Rs.35,000 crore and non-passenger revenue of Rs.6,500 crore.

In the end, Patel commented how the new international airport planned in Navi Mumbai in Maharashtra is a much required alternative as the existing domestic and international airport terminal in the current airport have become too congested.

“It might become difficult to allow any new flights in and out of Mumbai soon, given the congestion at the existing international airport and delays in building a new one at Navi Mumbai,” Patel said.

The new airport has been planned near Panvel in Navi Mumbai, about 30 km away from the current airport.

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