Air India to hive-off engineer, ground handling services

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SummaryAir India will create two wholly-owned subsidiaries as part of its turnaround plan.

Air India will hive off its engineering and ground handling services into two wholly-owned subsidiaries as part of its turnaround plan from January next year.

The Air India Board, at a meeting here, approved a Rs 768-crore proposal to hive off engineering and ground handling services from January next year, sources close to the development said.

Earlier, the Union Cabinet had cleared the proposal to create the two subsidiaries ¿ Air India Engineering Services Ltd (AIESL) and Air India Transport Services Ltd (AITSL).

The Air India Board had approved two years ago operationalisation of the two subsidiaries and submitted a note to the Civil Aviation Ministry to get the Cabinet nod.

Now, the national carrier would begin the process of transferring the assets and manpower to AIESL and AITSL which would be treated as separate profit centres.

AIESL would undertake maintenance, repair and overhaul (MRO) business not only for Air India but for other airlines as well. Within the Asia-Pacific region, the MRO business has a potential of nearly USD 1.5 billion.

AITSL, which would undertake ground handling services, would get an equity infusion of Rs 393 crore by Air India over 12 years. About 12 000 employees will shift to it.

The Board also discussed the airline's financial account for 2011-12 and about monetisation of Air India's asset in order to raise equity which is also a part of turnaround plan, the sources said.

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