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'Need careful implementation of Air India revival plan'

Delhi,Business/Economy, Fri, 27 Apr 2012 IANS

New Delhi, April 27 (IANS) A standing committee report which was presented to Parliament Friday cautioned the government about carefully implement the revival plan for national carrier Air India.

 

"The committee would like to caution the Air India management and the government to be very careful while implementing its restructuring, revival plans. The greatest challenge it must overcome on priority is that relating to Human Resource (HR) issues created due to ill-conceived merger plan," the standing committee on transport, tourism and culture said.

 

The committee supported the government's approval for the turnaround (TAP) and financial restructuring plans (FRP) for Air India, saying that it has noted the serious efforts being made by the Air India management and the government for taking the national carrier out of the current mess it is in.

 

"The committee feels that infusion of government equity to the tune of Rs.30,000 crore over a nine-year period, induction of 27 Boeing 787 Dreamliners, proposal to hive off Air India's maintenance, repair and overhaul (MRO) business and its engineering services as two wholly-owned subsidiaries will yield the much desired results in the long run."

 

Air India had borrowed some Rs.21,412 crore towards acquisition of new aircraft, another Rs.22,368 crore towards working capital and owes around Rs.2,000 crore to oil retailers, besides facing accumulated losses worth Rs.22,000 crore.

 

The Sitaram Yechury-led committee noted that the national carrier had to undergo a tough period during the last year mainly on account of merger-related issues, increasing jet fuel prices, employees' resentment over non-payment of dues and allotment of profitable routes to private carriers.

 

The committee also pointed to the fact that the cash-strapped flag carrier was also not able to spend its total allocation of Rs.32,730.71 crore for the eleventh five year plan period, as it only spent Rs.25,603 crore.

 

"The committee is surprised to note that when the national carrier was knocking the doors of financial institutions to bail it out, it was unable to spend money it had been allocated during the 11th plan period."

 

The committee added that it hopes that allocation of unutilised bilateral rights to Air India will benefit the passenger carrier in regaining its lost market share in the international sector.

 


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