Taking aggressive steps to turn around cash strapped Air India in two years, government on Tuesday said a major revamp of its top management would be carried out in 30 days and there would be a partial disinvestment of the national carrier in the near future.
"You will see in the next 30 days a major change in the top management in Air India. You are going to see a major change in the board. Some heads are going to roll.
"We are going to bring high quality people of great integrity and people with a proven track record in business," Civil Aviation Minister Praful Patel said here.
The minister's remarks came amid reports that the national carrier was expecting an estimated loss of about Rs 5,000 crore in the 2008 09 financial year.
Civil aviation ministry sources said at least seven independent directors, who are internationally reputed, would be inducted on the board.
A global advertisement will also be put out for a new chief operating officer for Air India, the sources said. Air India does not have such a post at present.
Apart from revamping the board, government would go in for "partial disinvestment" of the state-owned carrier in he near future, they said, adding that the plan was to ensure a full turnaround for the carrier in the next 24 months.
Patel had earlier said that the airline could go for issuing initial public offer (IPO) when its financial position as well as the stock market situation is stabilised.
Patel said in Parliament that the losses were largely due to high operating expenses, which have been compounded due to the economic recession resulting in a drop in passenger demand for air travel.
High oil prices last year and servicing of the debt on account of aircraft acquisition programme also led to the losses, he said.
In October last year, Air India's parent company, the National Aviation Company of India Ltd, had submitted a proposal to the government for equity infusion of Rs 1,231 crore and providing of a soft loan of Rs 2,750 crore with an interest of approximately five per cent payable over 15 years.
In a bid to stem its cash outgo, sources said Air India's fleet acquisition plan of purchasing a total of 111 aircraft from Boeing and Airbus companies would be "reviewed and redrawn".
Of the total aircraft order, Air India has till date inducted 49 planes at an estimated cost of almost Rs 8,000 crore.
The airline's private competitors, Jet Airways and Kingfisher Airlines, have already deferred deliveries of some of their aircraft, which were to be inducted this year.
Regarding manpower, sources said while an attractive Voluntary Retirement Scheme would be introduced, employees would be relocated to the various Special Business Units of Air India.
There were indications that the company, which had delayed the payment of salaries to its employees by 15 days leading to protests by the unions, would do so by July 14. AI CMD Arvind Jadhav has also asked the top management to forego their salaries for July.
Air India, like its private competitors, has been facing a financial crunch since the past few years. Its borrowings have risen steeply from Rs 6,550 crore in November 2007 to Rs 15,241 crore last month. This has been largely due to debt servicing for purchase of new aircraft.
Patel, accompanied by the Air India CMD, had last month met Prime Minister Manmohan Singh regarding the financial situation faced by the carrier and sought government's support.
While extending "fullest support", the Prime Minister had asked the airline to take immediate cost-reduction measures by cutting flab and overhauling its management to make it "leaner and trimmer".
A high-level Committee of Secretaries, headed by Cabinet Secretary K M Chandrasekhar, has been set up to monitor the airline's moves in this regard. It was also asked to come up with a detailed restructuring plan within a month and submit it to this Committee.