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Journalism of Courage
While struggling national carrier Air India is likely to get relief from the government on Saturday,it will be with riders. Rationalising and phasing out the productivity-linked incentive over a period of time by merging it with salary is one of the conditions the finance ministry will push for while agreeing for a package that includes equity infusion and soft loans.
Air India will also present to the CoS a detailed financial turnaround plan and put forward its boards views on wage restructuring and the controversial proposal to halve the productivity-linked incentive (PLI) that was rejected by the companys unions. Air India has accumulated losses to the tune of Rs 7,200 crore till March 2009.
The finance ministry is ready with the financial package for Air India. The assistance will be a mix of equity infusion and soft loans, a finance ministry official told The Indian Express. While he refused to divulge the exact quantum of funds,sources said it will be less than Rs 2,000 crore. Any assistance will be tied with several riders,the official said.
The CoS may also consider setting up a group of ministers to review the progress of Air India against (the) stated roadmap. Recently,the Union Cabinet had decided to set up a group of ministers to look into the aviation industrys woes,and specifically to examine the issue of jet fuel pricing. Some of the measures announced earlier by the carrier as part of its turnaround plan have already come through,insisted civil aviation ministry officials. The foreign offices have been closed and officials have been called back. The much-needed relief in the form of three-month credit on fuel purchase from oil marketing companies has come through. Negotiations are being held on the 50 per cent PLI cut issue with trade unions, said officials.
The carrier had earlier demanded equity infusion of Rs 5,000 crore a near-equal amount as soft loan. The company,which has a debt of Rs 16,000 crore,is negotiating with banks and financial institutions to turn its high-cost debt of Rs 10,000-11,000 crore into low-cost. The airline has also decided to cancel delivery of six Boeing aircraft. To shore up revenues,the management has decided to start low-cost domestic operations,expected to bring in earnings of Rs 180 -200 crore per annum. A separate cost management and audit team is looking at a financial restructuring plan,including debt servicing,risk management and hedging on jet fuel.
