India's national carrier, Air India, severely hit by financial crisis, still remains in the intensive care unit. Though the government has decided to infuse equity to an extent of Rs.800 crore, nothing seems to be going right for the National Aviation Company of India Limited, the new corporate entity created by merging Air India and Indian Airlines in 2007. For one thing, the process of merger is yet to be completed. Secondly, the losses are mounting month after month — currently Rs.400 crore a month, on average. A year after the formal merger, the losses had doubled to Rs.5,548 crore (2008-09). The airline is so badly strapped for cash that it needs Rs.1,000 crore more as working capital for just staying afloat and maintaining its services at the present level. Already, its working capital borrowings have piled up to Rs.16,000 crore, with the accumulated losses adding up to about Rs.7,000 crore. It appears that Air India is caught in a vicious circle. Wherever it turns to for assistance, it is required to come up with a road map for turning the company around. Given the airline's predicament where it cannot even pay for the fuel or clear the wage arrears of the staff, scaling up its operations — necessary for earning more revenue — is unthinkable in the absence of a lifeline.

At the Board of Directors' meeting last week, the proposal to hive off its strategic business units and make them independent, commercial entities was dropped from the agenda. So far, the company's efforts at raising funds have not borne fruit. It has to work out an actionable turnaround plan before the government can firm up, on the advice of the Group of Ministers concerned, further steps to resuscitate the airline. This means there has to be wide consultation involving the management, administrative staff, and trade unions to hammer out such a plan, whose components will include: rationalisation of wages and work force, discharge of debts, fleet expansion through induction of the latest aircraft, and an end to the culture of political interference in management. Air India has been calling for a level playing field in operations vis-à-vis private carriers. All these issues have been discussed intensely and at different levels in the past. But there has been no consensus on any of the issues that are critical for the viability of the airline. The government cannot be expected to keep pumping huge sums of money unless it is convinced that the airline has a comprehensive and practical plan of action for its revival. The bottom line should, of course, be the financial viability and sustainability of Air India. Time is running out, and the management must get its act together before it is too late.

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