Government will continue to support Air India during stake sale process

Government will continue to support Air India during stake sale process

The government will continue to support Air India during the disinvestment process and honour committed financial obligations till any further direction, union minister Jayant Sinha told the Lok Sabha.

In a written reply, he said cost reduction steps coupled with the implementation of the turnaround plan has resulted in an improved performance of Air India as it is “showing a turnaround on both operational and financial parameters.”

A group of ministers, headed by Finance Minister Arun Jaitley, is looking at the modalities for strategic disinvestment of Air India and its five subsidiaries. In June, the Cabinet Committee on Economic Affairs (CCEA) gave its in- principle approval for the disinvestment.

“During the disinvestment process, the government would continue to support Air India as per approved turnaround plan and would honour committed financial obligations till any further direction,” Sinha said in another written reply.

The minister of state for civil aviation was responding to a question on whether the disinvestment process would affect the fiscal discipline of the airline. The turnaround plan, which was approved by the previous UPA government in 2012, for the loss-making Air India provides for equity infusion of Rs 30,231 crore up to 2021, subject to the national carrier achieving certain milestones.

As part of the plan, various steps have been taken to cut costs and losses. These include route rationalisation and enhanced utilisation of new fleet.
In one of the written replies, the minister said Air India has been suffering net losses over the past many years. “However, these losses have been gradually coming down and in 2015-16 fiscal, the company has posted a moderate operating profit,” he added.

The airline has a debt burden of more than Rs 50,000 crore. Sinha said Air India has constituted an integration cell to redress the employees’ grievances arising due to “anomalies in increment, high personal pay, PF protection and drop in salary etc.”

Besides, there are open house meetings by Air India’s CMD and ED (Integration) as well as station visits by the CMD to carry out inspection and meetings with employees. The minister was replying to a query on whether Air India has changed the work environment and work culture for their employees to make the organisation more competitive and check further losses.

When asked about the reaction of the employees to these measures, Sinha said, “employees’ reaction is positive and morale is also high”. On whether Air India has drawn up a proposal to offer voluntary retirement scheme to around 15,000 employees before disinvestment, he replied in the negative. The minister also said the airline has not purchased any aircraft in the last three years.


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