Worst is over, Air India on path of recovery: Patel

An Air India aircraft. File Photo: K. Pichumani

An Air India aircraft. File Photo: K. Pichumani  

For the first time since the merger of the two national carriers, Air India’s losses have started to show a declining trend, with Civil Aviation Minister Praful Patel saying that the “worst is over”.

“Earlier the losses were in the average of Rs. 400 crore per month. Now these have started coming down by at least Rs. 100 crore per month,” Civil Aviation Minister Praful Patel said on Tuesday, asserting that “the worst is over and Air India is continuing on a path of recovery“.

This is the first time since the March 2007 merger that there has been any sign of recovery in the cash-strapped airline, which has started experiencing some improvement in yields with a rise in passenger traffic.

Given the signs of improvement, Mr. Patel ruled out any urgent need for the government to decide on its future.

“The new Air India Board is having a complete review of the airline’s functioning. They have formed four sub-committees (on audit, finance, strategy and HR) for the purpose. So, there is no immediate necessity for the Union Cabinet to take any decision,” he said on the sidelines of a CII conference on Indo-US relations here.

His comments came in the backdrop of unconfirmed reports that the government could consider restructuring the carrier if it did not come out of the present financial rut by divesting some of its stake. Air India recorded a loss of Rs. 5,500 crore in 2009-10 which are estimated to rise to Rs. 7,000 crore this year.

“Certainly things are looking much more controlled than they were two months ago,” Patel said, adding that the new Board, with four professionals and business leaders, should make “an independent assessment of the work that is required to be done before we take any further steps“.

“Certainly, there has been a qualitative improvement in the functioning (of Air India) in the last six months,” the Minister said, adding that an upward trend in passenger traffic had led to improvement in yields. Some old aircraft have been retired and new fleet was being inducted.

Making it clear that wage cuts were “not a priority”, he said “the priority is to try to improve efficiency, increase revenue, cut costs in other areas. These and a couple of other measures (including those suggested by the Board committees) will make a great impact“.

He said while Air India had received the first tranche of equity infusion worth Rs. 800 crore, it was slated to get another Rs. 1,200 crore in equity in the current financial year. “The amount has already been provided in the budget.”

Asked whether more foreign professionals would be inducted at the highest levels after Gustav Baldauf’s appointment as Chief Operating Officer, Mr. Patel said it was for the airline Board to decide.

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Printable version | Apr 8, 2020 5:56:15 AM |

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