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AI boss seeks staff help to revive airline

By Mihir Mishra
April 08, 2011 12:25 IST
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Air India Chairman and Managing Director Arvind Jadhav, has finally looked towards his employees for suggestions after trying many consultants in the past for reviving the debt-ridden state-run carrier.

In a letter, the CMD has asked his employees to come up with plans ensuring an increase in revenues and savings of the carrier, get their suggestions approved and also earn incentives.

"In order to ensure everyone's contribution to Air India's profitability, I invite full savings/earnings projects from you.

Think of a project where you could ensure a minimum of 10-15 per cent improvement in revenues or 10-15 per cent savings on budget allocation; submit it to the turnaround committee; get it approved; own it; implement it and earn incentives," Jadhav's missive said.

Such plans would be owned by individuals who come up with the ideas and they would be directly reporting to the turnaround committee, the letter added.

The employees have to mail their suggestions to S Venkat and Vinod Hejmadi, both part of the turnaround committee.This is the first time Jadhav has asked for support from its employees, who have always complained of being left out during any decision-making for the airline.

Jadhav also requested them to act like a team and offer better services than their competitors.

Air India is the largest airline in the country in terms of fleet, but this does not reflect in the number of passengers carried.

It is fourth in market share (15 per cent), behind Jet, Kingfisher and IndiGo. SpiceJet is close behind, with a 14 per cent share.

The government-run carrier has also the lowest occupancy in the market at a little above 60 per cent. All other airlines are flying planes with over 80 per cent occupancy.

To increase its occupancy to over 80 per cent, Air India is offering fares up to 15 per cent less than what low-cost carriers are quoting for the peak summer season, starting May.

Air India has accumulated losses of Rs 15,000 crore (Rs 150 billion). It lost Rs 2,226 crore (Rs 22.26 billion) in 2007-08, Rs 7,189 crore (Rs 71.89 billion) in 2008-09 and Rs 5,551 crore (Rs 55.51 billion) in 2009-10.

The carrier also has a debt burden of Rs 40,000 crore (Rs 400 billion) and got equity infusions of Rs 800 crore (Rs 8 billion) in 2009-10 and Rs 1,200 crore (Rs 12 billion) in 2010-11 from the government.

The government has also said it would infuse another Rs 1,200 crore (Rs 12 billion) in the current financial year that will take the equity base of the airline to Rs 3,345 crore (Rs 33.45 billion).

Of the Rs 40,000-crore (Rs 400-billion) debt burden, working capital debt is Rs 21,000 crore (Rs 210 billion) and the rest are loans taken to fund aircraft acquisition.

Working capital debt is all high cost, with an interest rate of 12 per cent.

 

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Mihir Mishra in New Delhi
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