FE Editorial : Grounded

Written by The Financial Express | Updated: Nov 22 2010, 10:20am hrs
The summary manner in which Pawan Arora, the COO of Air India Express, was dismissed at Air Indias board meeting symbolises the increasing trouble ahead for the airline. The Boards government nominees and independent directors didnt even bother to give Arora a chance to explain himself, though he had come prepared for thisafter the Board cleared his appointment the last time around, stories emerged saying hed been rejected by the Directorate General of Civil Aviation as a flight safety examiner and this had not been presented to the Board. At that time, Air Indias COO Gustav Baldauf and CMD Arvind Jadhav had pointed out that he had not been chosen as an examiner, but as a COO. The summary dismissal means that the next person chosen to be the COO of Air India Express, unless he is promoted from within the company, may even be reluctant to take up the jobat the meeting, Gustav told the Board that they could well do the same to him the next time around, dismiss him without even waiting for his explanation. For an airline which is trying to turn around, giving the COO and CMD such a short leash is a terrible start.

Shockingly, there was no discussion of the Air India proposal to get the government to infuse Rs 10,000 crore as equity and to give it an interest-free loan of Rs 10,000 crore with a five year moratorium on repayment. Instead the government has given it Rs 800 crore so far and has promised another Rs 1,200 crore later this yearthis is in trouble as the government is reportedly of the view this cannot be given to the airline till it makes matching cost savings. Air India has, however, pointed out that it cannot make the cost savings until the government clears its plans to set up ground handling and engineering subsidiariesthis plan has been pending before the Cabinet for a year now. And given Air Indias debt servicing profile, thanks to the $11 billion worth of planes UPA-1 got it to buy, it will be required to raise its revenues by 2-3 times to just service this! Hopefully, Air Indias directors, both the independent ones as well as those representing the government, will get down to discussing serious issues such as this before the airline closes down.