Government reviews Air India's turnaround plan

Monday, 31 August 2009, 02:04 Hrs
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New Delhi: A committee of secretaries (CoS) set up to look into the financial health of Air India Saturday asked the civil aviation ministry to forward its turnaround plan for the cash-strapped national carrier to the cabinet.

"The committee of secretaries has now directed the ministry of civil aviation to move a proposal to the cabinet in consultation with the ministry of finance," an official statement said.

Earlier in the day, the CoS, headed by Cabinet Secretary K.M. Chandrasekhar, met here to discuss the turnaround plan presented by Air India chairman and managing director Arvind Jadhav.

The plan includes cost reduction, revenue enhancement and business transformation measures undertaken by Air India in the last two months.

"While appreciating the various measures taken by Air India, the committee felt that in some areas more aggressive cost reduction measures need to be adopted and the company needs to examine its strategic position with respect to its shareholders objectives," the statement said.

A senior Air India official, who did not wish to be named, told IANS that the committee has in principle agreed to infuse an equity of 5,000 crore over the next three years.

"The equity infusion will be subject to review every three months," he said.

However, the airline has not confirmed this.

The national carrier had earlier sought 15,000 crore from the government to overcome its financial crisis.

Air India is estimated to have suffered a loss of 7,200 crore in 2008-09. It is currently overburdened by its working capital borrowings of 17,000 crore and has overdrafts from 15 banks.
Source: IANS
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