In a stormy, day-long meeting of the board on Thursday, the airline is also believed to have decided to review the appointment of chief of training Stefan Sukumar.
Giving in to intense pressure from the independent directors on its board, Air India is believed to have issued orders cancelling the appointment of Pawan Arora as chief operating officer (COO) of its budget airline Air India Express.
In a stormy, day-long meeting of the board on Thursday, the airline is also believed to have decided to review the appointment of chief of training Stefan Sukumar.
However, it has ratified the appointment of COO Gustav Baldauf and chief information officer Kamaljeet Rattan.
Sources said the three independent directors present — Ficci’s Amit Mitra, Ambjua Group’s Harsh Neotia and former air chief Fali H Major — voiced strong opposition to Arora’s continuance as COO of the low-cost arm.
Their main grouse was based not on the objections raised over Arora’s qualifications earlier by the Director General of Civil Aviation, but on his salary package. Arora was hired on a three-year contract for a total sum of `3.6 crore.
Sukumar’s salary package is also similar, though slightly lower than Arora’s.
Sources said the independent directors did not even wait for the management — CMD Arvind Jadhav and COO Baldauf — to present its arguments, insisting that Arora be asked to go.
Even government nominees on the airline board sided with the independent directors in objecting to Arora.
Official sources had earlier told DNA that these directors had challenged Arora’s appointment on several occasions earlier as well.
Official sources had earlier told DNA that these director had challenged Arora’s appointment on several earlier occasions as well. “EK Bharatbhushan (one of the Government nominees) objected to these appointments on the basis of salaries. This proposal was opposed in the strategic committee meeting. Then, another director on the board wrote to the airline asking it to follow proper procedures for approvals. Yet another director looking after Air India in the Ministry of Civil Aviation wrote to the airline asking it to get ACC (appointments committee of the cabinet) approval”.
So what happens now? A fresh search is likely to begin for a COO for Air India Express, but the new candidate should not expect an annual salary package of over Rs1 crore.
Meanwhile, Air India on Thursday reported encouraging numbers for the 2009-10 fiscal.
Net loss fell 23% to Rs5,551 crore as load factors and yields improved. Operating losses fell 39% to Rs3,472 crore.
Among other operational parameters, passenger load factor improved by 9 percentage points to 64.8%. While the available seat kilometers increased 2.6% to 44,722 million, the revenue passenger kilometers increased 12% to 28,965 million.
The improved financial performance was despite an increase of Rs769 crore, or 46%, in interest and financing charges due to induction of more aircraft, increase in working capital borrowings and interest rates. Total expenditure fell 8% from Rs20,668 crore to Rs19,035 crore.
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