Two key government departments ? the finance ministry and the Planning Commission ? have sought clarifications on the state-owned Air India?s plan to hive off ground handling and maintenance, repair and overhaul (MRO) activities from the airline.

In a communication to the civil aviation ministry, the administrative government department for Air India, the Planning Commission, has asked when would the two special business units (SBUs) of the carrier would break even and also whether the business plans were backed by market studies.

?We had circulated cabinet notes on separation of ground handling and MRO from Air India to various ministries. In response to that the finance ministry and the Planning Commission have desired to know the airline?s growth and revenue projections of the two subsidiaries,? a senior aviation ministry official told FE.

Air India had decided to separate its non-core activities from the airline after the merger of erstwhile Air India and Indian Airlines in 2007. The move suggested by consultancy firm Accenture is expected to improve the airline?s cash flow and saving. Aviation secretary Nasim Zaidi on Friday chaired a meeting of top Air India officials led by its new chairman and managing director (CMD) Rohit Nandan to discuss the progress on segregation of SBUs. ?It was basically an appraisal meeting. Since the airline management is very new it would take time to take decisions on issues,? the official said.

Air India is faced with severe liquidity crunch and is burdened with a total liability of Rs 62,000 crore. It is working on a turnaround plan prepared by Deloitte and is expected to take tough decisions on issues like wage reduction and fleet rationalisation in the months to come. Separation of non-core activities is part of the revival plan as it would help Air India redeploy nearly 50% of its existing 30,000 employees.

As a result, the airline would take its manpower and aircraft ratio to global benchmark of 160:1. At present its employees per aircraft ratio of 230:1 is highly uncompetitive. The SBUs are proposed to be separate profit centres of the airline.