The civil aviation ministry has urged the government to release the second round of equity infusion worth Rs 1,200 crore for Air India at the earliest instead of waiting for the airline to cut its wage bill to be eligible for financial assistance. The Cabinet on Thursday is expected to take up the proposal.
A ministerial panel headed by finance minister Pranab Mukherjee had earlier linked the Rs 1,200-crore equity support to the carrier with a cut in its wage bill through negotiations with over a dozen trade unions.
?We have sent the note to cabinet secretary KM Chandrashekhar urging the government to release Rs 1,200 crore for Air India and not wait till the carrier manages to rationalise its wage structure. Negotiating legacy union agreements is not easy. It may take some time, maybe 6-8 months,? a senior official in the ministry of civil aviation said.
The Cabinet note also seeks government approval for operationalisation of two special business units of ground-handling and maintenance, repair and overhaul.
Air India has shown improved performance in the last few months with its passenger revenue going up by 24% to Rs 835 crore during April-August this year over the corresponding period last year. The airline is expected to report operating profit this fiscal on the back of a surge in domestic and international air traffic.
?Air India has met most of the revenue targets as set by the group of ministers (GoM),? the official said.
Another government official said the aviation ministry?s note to the Cabinet could be first considered by Mukherjee since he headed the GoM which set several targets for Air India and linked the financial support with wage rationalisation.
The national carrier had earlier tried to cut salaries of its over 31,000 staff but met with strong resistance from several employee unions. Nearly 200 executive pilots had in September last year resorted to strike protesting against the airline management?s decision to cut their salaries.