AI staff under fire as govt starts firefighting

Written by Economy Bureau | New Delhi | Updated: Jun 25 2009, 08:06am hrs
Acknowledging an unprecedented crisis in Air India, the government has set up a firefighting group headed by Cabinet secretary, decided to restructure the board of the airlines to bring in more independent directors and assured it one-time financial help on Wednesday. The government also ruled out disinvestment in the state-owned carrier for now, because of the precarious nature of its balance sheet.

The decisions were announced after an emergency meeting of Prime Minister Manmohan Singh and civil aviation minister Praful Patel. Air India has suffered a loss of more than Rs 5,000 crore in 2008-09. The carrier has asked for a bailout package of Rs 14,000 crore, sources said, but Patel did not indicate any figure. The minister talked tough and said this will be one last opportunity we will try to turn Air India around.

The group headed by the Cabinet secretary KM Chandrasekhar will include Prime Ministers principal secretary TKA Nair, finance secretary Ashok Chawla and civil aviation secretary MM Nambiar. It will meet every month, Patel told reporters.

Patel said Singh has assured the carrier support but funds will be given with tough conditions, including massive reductions in costs through rationalisation of manpower and employee costs. There will be no open-ended cheque book to Air India. There is a lot of excess flab on the entire body of Air India. he said. The airline has asked its senior managers to forego their salary for July and had deferred salary for all employees till the middle of June.

Air India has 30,000 employees on its rolls. Patel said the crisis at Air India started almost three years ago but was accentuated in the last one-and-a-half years.

The independent directors in the board will be culled from experts in aviation and finance. The 10-member Air India board now comprises only one independent director, N Vaghul, former chairman of ICICI Bank.

Even though Patel pressed the Air India management to put in place austerity measures to make the airline trimmer and leaner, he said the carrier will continue with its plan to purchase 111 aircraft by March 2012 at a cost of about $11 billion.

Trying to fix the responsibility, Patel said employees of Air India have a lot to answer in causing this situation. He said Air India CMD Arvind Jadhav will meet the employee unions on Thursday to convince them of the need to trim the manpower besides rationalising the salary and incentive structure. Let them (employee unions) go on strike, they will hasten their demise, Patel warned.

Meanwhile, opposition parties Bharatiya Janata Party and Shiv Sena have demanded a thorough probe into the airlines monetary mess. While the Shiv Sena-led unions have called upon the Prime Minister to set up a joint parliamentary committee, BJP has demanded that the Comptroller & Auditor General and Chief Vigilance Commission should inquire into the airlines functioning.