Cabinet Secretary assures bailout plan to Air India

Monday, 22 June 2009, 15:16 IST   |    3 Comments
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New Delhi: The government has promised to do "everything" that is possible to save the country's flag carrier Air India, which is struggling hard to cope with a cash crunch, a senior airline official said Saturday. This promise was made by Cabinet Secretary K.M. Chandrasekhar Saturday in a meeting with Air India's top brass, including its chairman and managing director Arvind Jadhav, the official, who did not wish to be named, told IANS. "The government now is taking us seriously and looking into our demands. We have been assured that the government would do everything to save the airline from the crisis," he said. The airline management would meet T.K.A. Nair, principal secretary at the Prime Minister's Office, Wednesday for further discussions. Civil Aviation Secretary M. Madhavan Nambiar was also present at Saturday's meeting. When contacted, an Air India spokesperson refused to share any details. Asked whether the airline officials met the cabinet secretary, he said: "I will neither admit nor deny this." The Air India chairman has been camping in the capital for the last two days. Another airline official, on condition of anonymity, told IANS that the U-turn in the government's stand shows that Air India's "pressure tactics" have succeeded. National Aviation Co India Ltd, which owns Air India, had earlier announced that it would delay the June salaries of its employees by 15 days. It also asked its top management to voluntarily forego one-month salary and productivity linked incentives. The employees responded angrily to the management's decision and threatened to go on an indefinite strike from July 1 if the airline delayed their salaries. This, according to the official, put the government under pressure to act swiftly. However, airline officials said they still did not expect any major bailout announcement from the government. "There is nothing big coming out for us in the next budget. Even if we are given funds, that would not be of much help for us in the long run," said a senior airline official. Earlier in the day, in a letter to Air India employees, Jadhav said interest rates on loans from financial institutions were very high and the airline cannot avail loans endlessly to meet its working capital requirements. Air India plans to raise 5,000 crore in equity capital, 7,000 crore as a five-year soft loan and a special grant of 2,000 crore. Air India incurred losses of over 4,000 crore last fiscal.
Source: IANS
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