The government has constituted a committee under the chairmanship of former petroleum secretary Vijay Kelkar to go into the issue of financial restructuring of Air India.
The committee, which is due to submit its report within three months, will also study the issue of merger of Indian Airlines and Air India.
The new committee is expected to come out with a comprehensive package to help the airline fund its expansion plans and infuse a more productivity-oriented culture into the national flag carrier.
A code-sharing agreement has already been put in place between the two airlines as a precursor to the merger. Both the national carriers have been given five months to make arrangements to load a standard code-share reservations package onto their system to enable efficient access, reservations and passenger convenience.
Earlier, noted economist Kelkar, who has recently been appointed chairman of the Tariff Commission, had been assigned the task of reviving the fortunes of Indian Airlines. The report had recommended a capital injection of Rs 922 crore to turnaround the airline.
The formation of the new committee comes close on the heels of the recent rejection of financial restructuring report prepared by I-Sec which had recommended dilution of governments equity by 50 per cent and raising funds to the tune of Rs 1,000 crore at Rs 72 per share raise to fund the airlines fleet expansion programme.
According to the I-Sec report, proceeds from the equity dilution were to be used to part-finance a Rs 7,518 crore plan that it had drawn up for Air India for the next five years. While Rs 1,098 crore was to be raised through equity sale, another Rs 6,420 crore was earmarked for fresh debt infusion into the airline. The airlines equity base at present is Rs 153.84 crore.
I-Sec had suggested that the medium-capacity long-range (MCLR) fleet consisting of 10 firm offers could be entirely funded out of the public issue. It had also recommended that the airline should take 200-seaters on dry lease.
