A group of ministers (GoM) will consider Air India's demand for equity infusion of Rs 5,000 crore and its financial restructuring plan at a meeting in New Delhi tomorrow as the airline has begun implementing a series of measures to reduce costs by Rs 3,000 crore annually.
"The GoM on the civil aviation sector, headed by Finance Minister Pranab Mukherjee, is meeting tomorrow as the government has broadly agreed to support Air India in its restructuring process," Civil Aviation Minister Praful Patel said today.
The GoM would also look at a presentation of Air India on its restructuring plan and try to address the issues, keeping in mind the recommendations of the Committee of Secretaries, he said.
Patel had last week said in Mumbai that the cash-strapped airline required around Rs 5,000 crore as additional equity infusion, a demand that was being considered by the government.
He said the government and the airline will have to find ways together to find a solution to the current problem.
Patel expressed confidence that the employees of the national carrier would contribute towards restructuring of the airline and work towards cost cutting and revenue enhancement.
Air India is broadly looking at reducing costs by about Rs 3000 crore and enhancing revenues by Rs 2000 crore annually, which could lead it on a recovery path, Patel said.
The minister said he had met the representatives of staff unions in Mumbai last week and explained to them that everybody has to put their best foot forward.
"Fortunately, we had a good meeting and they are willing to put their best foot forward. To say that the employees are not strength of Air India would be unfair," he said.
Replying to questions on the unions' demand that incentives and allowances should not be deducted, he said, "We have understood that without cost cutting, and cost cutting could be in any form, if they are able to achieve the objective of cost cutting, I have no problem, if they are able to enhance revenue to the desired extent, I have no problem."
Meanwhile, official sources said the government has in principle agreed to infuse additional equity into the airline and a draft note for the Cabinet Committee on Economic Affairs was being prepared by the Civil Aviation Ministry for submission soon.
As part of cost-cutting measures, the national carrier has a planned to retire its large fleet of aircraft over the next 12-24 months. These would include sale and lease back of some Boeing 777-LR aircraft. It has also decided to defer the delivery of six B777s aircraft by two years.