The plan is to achieve the desired growth through savings as well as revenue enhancementNew Delhi: To follow through on its plan to revive Air India before it can be taken up for disinvestment, the government has set a target of improving the national carrier’s financial numbers by Rs 2,000 crore per annum. The plan is to achieve the desired growth through savings as well as revenue enhancement.
Speaking on the sidelines of a curtain raiser event for the global aviation summit scheduled during the middle of January in Mumbai, aviation secretary RN Choubey said, “Through revenue enhancement and cost savings, Air India has to show an improvement of about Rs 2,000 crore per annum. The plan has been approved by the alternative mechanism for Air India.”
The alternative mechanism is a group of ministers that was set up in June this year to take decisions related to the disinvestment of Air India. It is headed by Finance minister Arun Jaitley and has aviation and commerce minister Suresh Prabhu as one of its members.
The revival plan
Choubey said that the savings through the transfer of debt, which will lead to a substantial reduction in the airline’s annual interest outgo, would be over and above the Rs 2,000 crore target. A special purpose vehicle has been created by the government to transfer about Rs 29,000 crore of Air India’s total debt.
Another decision that has been taken to ease the debt burden on the state-owned airline is the 100 percent sale of Air India Air Transport Services (AIATSL). It has been approved by the alternate mechanism and the proceeds of the sale will go into clearing part of the Rs 29,000 crore debt that the government has taken upon itself.
While remarking that the Finance Ministry and the minister had taken it upon themselves to support the airline fully, Prabhu said, “We want the airline to improve its financial and operational performance and any decision on the future of Air India will only be taken, when things improve.”
PSU Watch is a business news brand of 27 Frames Communications LLP. It places the spotlight on PSUs, Governance, Bureaucracy, Defence and Public Policy as the sector traverses through a period of radical change.