The first meeting of the Group of Ministers (GoM) to discuss funding options for cash-strapped Air India remained inconclusive today and it will meet again in a week.
“The GoM discussed issues related to Air India and the aviation industry, but no decision could be taken. Inputs are awaited from the turnaround panel and consultants and we will meet again in a week,” said Civil Aviation Minister Praful Patel.
But sources said GoM might approve the recommendation of the Committee of Secretaries (CoS) to infuse Rs 5,000 crore in Air India. But that will come with stiff riders, which means the airline will have to perform and cut costs. The CoS, headed by Cabinet Secretary K M Chandrasekhar, is monitoring the revival of the beleaguered airline on a monthly basis.
The government plans to infuse Rs 5,000 crore — Rs 2,000 crore in the form of equity and rest to fund the functioning — in the bleeding airline, which has an equity capital of Rs 145 crore. Air India has losses of around Rs 7,200 crore on its books and has debt of Rs 15,000 crore on its books. Of this, Rs 11,000 crore are high-cost debt.
The GoM is headed by Finance Minister Pranab Mukherjee and includes Praful Patel, Petroleum Minister Murli Deora, Home Minister P Chidambaram and Planning Commission Deputy Chairman Montek Singh Ahluwalia.
The meeting was also attended by Aviation Secretary M M Nambiar, Air India Chairman and Managing Director (CMD) Arvind Jadhav and Joint Secretaries and Air India board members, Prashant Sukul and E K Bharat Bhushan.
The cash-strapped airline could not pay the July salaries to its employees. Senior officials of the airline did not take their salaries following a request from the CMD.
In an attempt to trim costs, the airline announced to cut the productivity-linked incentive (PLI) of all 31,000 employees by 50 per cent, which was objected by the unions. Later, the airline management announced to cut the PLI ranging from 25 per cent to 50 per cent, which was objected by executive pilots. The airline then had to roll back the cut for executive pilots and a committee was set to look into the same.
