THE Centre will finalise a revival package for the ailing Air India in a month, a top official of the Civil Aviation Ministry said assuring "need-based" support to the debt-laden carrier. Civil Aviation Secretary, RN Choubey also said the safety audit that the Director General of Civil Aviation ordered on domestic airlines "did not find any backlog of any safety steps that they should have taken."
"Whenever there is a need for financial support to Air India, it to Air India, it will be examined on need basis and such financial support on need...basis will be provided. I only wish to tell you that all support will be provided.
Air India's competitiveness and efficiency will not be compromised. We have nearly finalised the package and there will not be any problem for Air India. Within this month yes. Certainly," Choubey told reporters on October 9. He said the disinvestment of Air India may be possible only after the macroeconomic conditions and market conditions are favourable and expected that the airlines would improve its efficiency and operational capabilities.
The official further said the rising fuel prices and sliding Rupee against Dollar, impacted the profitability of the industry during the past two quarters and the ministry was also working separately on various measures to support the airlines sector in general.
"The intention is to bring down the cost. You must appreciate that the cost of operations has gone up because the rental has gone up on account of devaluation of Rupee and fuel prices have also led to the cost increase in operations. So our intention is to bring down the cost. That’s what we want to provide," he said.
According to another report, the government plans to transfer over 60 percent of Air India’s debt to an SPV, and to give it another 2-3 years to become profitable under another turnaround plan. The national carrier’s debt is likely to increase given the rising fuel prices and another major area of concern is it 11000 odd permanent staff who are likely to retire in coming years and pension to them will be another headache.
Earlier, Civil Aviation Minister Suresh Prabhu had said that the national carrier has "unsustainable debt" and legacy issues need to be dealt with. Loss-making Air India is estimated to have a debt burden of more than Rs 48,000 crore and the government's efforts for strategic disinvestment of the carrier failed in May.
Air India has been making losses since the merger with Indian Airlines in 2007.
As per its audited accounts, the airline's accumulative losses stood at Rs 47,145.62 crore in financial year 2016-17.
High interest burden, increase in competition, high airport user charges, adverse impact of exchange rate variation and liberalised bilaterals to foreign carriers leading to excess capacity in the market are among the major reasons for the losses, according to the Civil Aviation Ministry.