Thaindian News

Mumbai, Oct 14 (IANS) Talking tough on cost-cutting measures at Air India which posted losses of Rs.7,200 crore last fiscal, Civil Aviation Minister Praful Patel said here Wednesday that a major revamp would be taken to save the national carrier, including infusing additional equity of around Rs.5,000 crore.
Addressing reporters after separate meetings with the Air India management and representatives of staff unions, Patel said the aim would be to reduce costs by Rs.3,000 crore annually and generate additional revenue of Rs.2,000 crore.

The options for this were infusing additional equity and restructuring of existing high-cost debts, he said, making it clear that it would be difficult for the carrier to survive without these measures.

While a proposal on infusing additional equity in the carrier has been submitted to the Cabinet Committee on Economic Affairs, the cost-cutting measures would include retiring leased aircraft and leasing out some of the new ones.

“Though 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.

He reiterated 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.

In this regard, Patel said the airline has deferred by two years taking delivery of six new Boeing 777 aircraft it had ordered. It has also shelve plans to take on lease new aircraft, including the long-range Boeing 777.

The minister described as “positive” his meetings with representatives of Air India’s 14 unions and said they appreciated the airline’s problems.

In his meetings, Patel had sought their cooperation and suggestions on cost-cutting measures to help turn around the AI.