Delhi: The struggling Air India will get financial aid from government if it undertakes radical cost-cutting. This offer came when Prime Minister Dr Manmohan Singh met Arvind Jadhav, the new chairman and managing director of Air India. Air India is facing liquidity crisis and is wrestling with $4 billion in accumulated debts even as it awaits delivery of scores of new Boeing and Airbus aircraft. Union Civil Aviation Minister Praful Patel said that the government is fully committed to Air India to tide it over the present crisis.
He noted that the Air India and the union that represents its 31,000 staff would have to undertake “massive cost reduction” and other financial and operational improvements. The carrier has postponed the June salary payments by two weeks and has requested 150 executives to give up their July salaries. It has already said that it will try to reduce salaries by five billion rupees, about 17 percent of its wage bill, while the government is reviewing the carrier’s order for more than 100 new Boeing and Airbus aircraft, about half of which have yet to be delivered.
The government is also thinking to appoint eight independent directors to shake up Air India’s board. The wider crisis in India’s aviation industry over the past year had pushed the carrier close to breaking point, as plunging passenger numbers and soaring fuel prices led to about $800 million accumulated losses in the past financial year.