Divestment was one of the demands of a consortium of banks that lent money to the airline.
The Group of Officers working on a turnaround plan for Air India has suggested divesting the ailing airline once it achieves an “appropriate growth rate”.
The group, headed by Vilasini Ramachandran, special secretary in the finance ministry, has representatives from the ministries of finance, civil aviation and planning commission. Ramachandran has already submitted the group’s recommendations on Air India to the Group of Ministers (GoM), headed by finance minister Pranab Mukherjee.
Will the government consider divesting some of its equity in the airline, which now has a working capital debt of Rs22,000 crore in its books? Though top officials in the civil aviation ministry refused to comment, documents with DNA show the group has said the airline could be divested to a strategic partner after it reaches the growth rate.
Divestment was one of the demands of a consortium of banks that lent money to the airline. It was also discussed a few years ago when Air India and Indian Airlines merged successfully. Such a proposal can materialise when the airline starts posting profits — and that may happen only at the end of this decade. The group has suggested the airline should give performance-linked incentives (PLI) only when it turns profitable.
PLIs now constitute almost 80% of the earnings of some pilots. It has also said that the airline should improve its passenger load factor (percentage of seats occupied in a plane) to 73% by 2015 and to 75% by 2020. The current load factor is 69.5%.
The GoM has asked Air India to seek provisioning from the Reserve Bank of India to convert the Rs22,000 crore short term working capital loans in its books to long term debt. This could save up to Rs1,000 crore every year in interests for the airline.
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
)
){kind=small}
){kind=small}
)
)
)
)
)
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}