Why only a Satyam-like restructuring can save Air India from losses and mounting debt
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72.75
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-01.05
Vol:591521 shares traded
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-01.15
Vol:2137689 shares traded
There was no expectation this time. When a group of ministers (GoM) met last month on a 'turnaround plan' for shipwrecked Air India, it barely drew the attention an endeavour to save the country's number one aviation asset would.
So many times has Air India been through a cycle of destruction - airline messes up, government disassociates itself, losses and debt mount, government steps in, heads roll, government cobbles up new plan - that any intention to heal draws more mirth than sympathy, ridicule than belief.
Belief is in short supply in the government too - the latest plan has been in the works for about nine months now. As are business ideas and political will. The latest plan, like the three that preceded it, is to grease the airline's operations with cash. This is an operation that, in 2009-10, lost Rs 5,500 crore on revenues of Rs 13,100 crore and can't service its Rs 43,000 crore debt.
Yet, the GoM wants to infuse Rs 23,000 crore - of taxpayer money - into Air India by 2020, starting with Rs 6,500 crore this year. It also wants to restructure Rs 22,000 crore of its loans and give the airline a breather on repayment, for which it has sought a view of the banking regulator. In other words, the GoM, headed by finance minister Pranab Mukherjee, hopes that more cash will revive the airline.
"That's the problem," says aviation analyst Kapil Kaul. "The airline needs a financial restructuring plan, but a credible and comprehensive business plan, spread over five to 10 years, must come first." All turnaround efforts have been either silent or have not addressed the business plan adequately.
Such a plan should cover how much Air India will fly, how it will source its planes, what will it do with employees surplus to needs, how will it improve service and market share, will it join a global alliance, what ancillary activities it will focus on and what it will let go...Put another way, how will it restructure its operations, which are all over the place?
For example, Air India has 38,000 employees - about three times the industry norm - and they reside in two camps that don't get along. Or, despite accumulated losses of Rs 13,000 crore, it has committed to spending about Rs 20,000 crore to buy 27 Dreamliners from Boeing in the next few years.
Aviation: Struggling for Survival 
This plan should cover how much AI will fly, how it will source its planes, what will it do with employees surplus to needs, how will it improve market share.
Kingfisher's 15-crore cheque to AAI bounces
NEW DELHI: Cash-strapped Air India and Kingfisherare fast becoming flashpoints with unpaid employees and vendors. Last week, a Rs 15-crore chequeissued by Kingfisher to Airports Authority of India (AAI) bounced following which the state-run airport operator put the airline back on daily cash-and-carry.
Since this move threatened to completely disrupt Kingfisher's schedule that is already feeling the heat with pilots quitting, AAI started accepting some part payment but has called airline top brass to make its stand clear on the over Rs 200 crore dues now. The airline did not offer comment on this issue.
AAI's dues from AI, on the other hand, are now inching to the Rs 1,000-crore mark with the figure climbing to Rs 950 crore, said a senior official. While being a sister public sector unit run by the same parent aviation ministry, AAI can do nothing about AI.
The Maharaja's long unpaid employees, however, are now seething with anger and the airline may well be headed for a serious round of industrial action due to the government's complete failure in undoing the damage its controversial decisions caused to AI-IA combine earlier.
"For five months we have not been paid our allowances that account for 80-85% of the total salary. For instance, a commander in erstwhile Indian Airlines has a monthly package of Rs 3.5 lakh - Rs 30,000 in basic and HRA and the rest allowances. Frustrated employees could soon resort to mass sick leave or some other action. Unpaid employees are bearing the brunt of wrong decisions taken by UPA-1," said a long time employee.
A top airline official said employees would be paid one month's salary and allowance by this weekend. "We have to pay Rs 209 crore to oil companies by 4 pm on Tuesday. After that we have about Rs 200 crore that would be paid as one month's salary and allowance by this Friday or Saturday," said the official.
Going unpaid on Diwali too hasn't gone down well with employees and the unrest is fast assuming alarming proportion over the growing uncertainty on salary payment. The government's 'balm' to AI employees of removing an unpopular chairman and MD did for work for some time but now the staffers are up in arms over going unpaid for so long.
"The government should now tell us if it can run the airline. Else it must give us clearance to leave," said a senior pilot.
There was no expectation this time. When a group of ministers (GoM) met last month on a 'turnaround plan' for shipwrecked Air India, it barely drew the attention an endeavour to save the country's number one aviation asset would.
So many times has Air India been through a cycle of destruction - airline messes up, government disassociates itself, losses and debt mount, government steps in, heads roll, government cobbles up new plan - that any intention to heal draws more mirth than sympathy, ridicule than belief.
Belief is in short supply in the government too - the latest plan has been in the works for about nine months now. As are business ideas and political will. The latest plan, like the three that preceded it, is to grease the airline's operations with cash. This is an operation that, in 2009-10, lost Rs 5,500 crore on revenues of Rs 13,100 crore and can't service its Rs 43,000 crore debt.
Yet, the GoM wants to infuse Rs 23,000 crore - of taxpayer money - into Air India by 2020, starting with Rs 6,500 crore this year. It also wants to restructure Rs 22,000 crore of its loans and give the airline a breather on repayment, for which it has sought a view of the banking regulator. In other words, the GoM, headed by finance minister Pranab Mukherjee, hopes that more cash will revive the airline.
"That's the problem," says aviation analyst Kapil Kaul. "The airline needs a financial restructuring plan, but a credible and comprehensive business plan, spread over five to 10 years, must come first." All turnaround efforts have been either silent or have not addressed the business plan adequately.
Such a plan should cover how much Air India will fly, how it will source its planes, what will it do with employees surplus to needs, how will it improve service and market share, will it join a global alliance, what ancillary activities it will focus on and what it will let go...Put another way, how will it restructure its operations, which are all over the place?
For example, Air India has 38,000 employees - about three times the industry norm - and they reside in two camps that don't get along. Or, despite accumulated losses of Rs 13,000 crore, it has committed to spending about Rs 20,000 crore to buy 27 Dreamliners from Boeing in the next few years.
So many times has Air India been through a cycle of destruction - airline messes up, government disassociates itself, losses and debt mount, government steps in, heads roll, government cobbles up new plan - that any intention to heal draws more mirth than sympathy, ridicule than belief.
Belief is in short supply in the government too - the latest plan has been in the works for about nine months now. As are business ideas and political will. The latest plan, like the three that preceded it, is to grease the airline's operations with cash. This is an operation that, in 2009-10, lost Rs 5,500 crore on revenues of Rs 13,100 crore and can't service its Rs 43,000 crore debt.
Yet, the GoM wants to infuse Rs 23,000 crore - of taxpayer money - into Air India by 2020, starting with Rs 6,500 crore this year. It also wants to restructure Rs 22,000 crore of its loans and give the airline a breather on repayment, for which it has sought a view of the banking regulator. In other words, the GoM, headed by finance minister Pranab Mukherjee, hopes that more cash will revive the airline.
"That's the problem," says aviation analyst Kapil Kaul. "The airline needs a financial restructuring plan, but a credible and comprehensive business plan, spread over five to 10 years, must come first." All turnaround efforts have been either silent or have not addressed the business plan adequately.
Such a plan should cover how much Air India will fly, how it will source its planes, what will it do with employees surplus to needs, how will it improve service and market share, will it join a global alliance, what ancillary activities it will focus on and what it will let go...Put another way, how will it restructure its operations, which are all over the place?
For example, Air India has 38,000 employees - about three times the industry norm - and they reside in two camps that don't get along. Or, despite accumulated losses of Rs 13,000 crore, it has committed to spending about Rs 20,000 crore to buy 27 Dreamliners from Boeing in the next few years.
Aviation: Struggling for Survival
This plan should cover how much AI will fly, how it will source its planes, what will it do with employees surplus to needs, how will it improve market share.
Kingfisher's 15-crore cheque to AAI bounces
NEW DELHI: Cash-strapped Air India and Kingfisherare fast becoming flashpoints with unpaid employees and vendors. Last week, a Rs 15-crore chequeissued by Kingfisher to Airports Authority of India (AAI) bounced following which the state-run airport operator put the airline back on daily cash-and-carry.
Since this move threatened to completely disrupt Kingfisher's schedule that is already feeling the heat with pilots quitting, AAI started accepting some part payment but has called airline top brass to make its stand clear on the over Rs 200 crore dues now. The airline did not offer comment on this issue.
AAI's dues from AI, on the other hand, are now inching to the Rs 1,000-crore mark with the figure climbing to Rs 950 crore, said a senior official. While being a sister public sector unit run by the same parent aviation ministry, AAI can do nothing about AI.
The Maharaja's long unpaid employees, however, are now seething with anger and the airline may well be headed for a serious round of industrial action due to the government's complete failure in undoing the damage its controversial decisions caused to AI-IA combine earlier.
"For five months we have not been paid our allowances that account for 80-85% of the total salary. For instance, a commander in erstwhile Indian Airlines has a monthly package of Rs 3.5 lakh - Rs 30,000 in basic and HRA and the rest allowances. Frustrated employees could soon resort to mass sick leave or some other action. Unpaid employees are bearing the brunt of wrong decisions taken by UPA-1," said a long time employee.
A top airline official said employees would be paid one month's salary and allowance by this weekend. "We have to pay Rs 209 crore to oil companies by 4 pm on Tuesday. After that we have about Rs 200 crore that would be paid as one month's salary and allowance by this Friday or Saturday," said the official.
Going unpaid on Diwali too hasn't gone down well with employees and the unrest is fast assuming alarming proportion over the growing uncertainty on salary payment. The government's 'balm' to AI employees of removing an unpopular chairman and MD did for work for some time but now the staffers are up in arms over going unpaid for so long.
"The government should now tell us if it can run the airline. Else it must give us clearance to leave," said a senior pilot.
Since this move threatened to completely disrupt Kingfisher's schedule that is already feeling the heat with pilots quitting, AAI started accepting some part payment but has called airline top brass to make its stand clear on the over Rs 200 crore dues now. The airline did not offer comment on this issue.
AAI's dues from AI, on the other hand, are now inching to the Rs 1,000-crore mark with the figure climbing to Rs 950 crore, said a senior official. While being a sister public sector unit run by the same parent aviation ministry, AAI can do nothing about AI.
The Maharaja's long unpaid employees, however, are now seething with anger and the airline may well be headed for a serious round of industrial action due to the government's complete failure in undoing the damage its controversial decisions caused to AI-IA combine earlier.
"For five months we have not been paid our allowances that account for 80-85% of the total salary. For instance, a commander in erstwhile Indian Airlines has a monthly package of Rs 3.5 lakh - Rs 30,000 in basic and HRA and the rest allowances. Frustrated employees could soon resort to mass sick leave or some other action. Unpaid employees are bearing the brunt of wrong decisions taken by UPA-1," said a long time employee.
A top airline official said employees would be paid one month's salary and allowance by this weekend. "We have to pay Rs 209 crore to oil companies by 4 pm on Tuesday. After that we have about Rs 200 crore that would be paid as one month's salary and allowance by this Friday or Saturday," said the official.
Going unpaid on Diwali too hasn't gone down well with employees and the unrest is fast assuming alarming proportion over the growing uncertainty on salary payment. The government's 'balm' to AI employees of removing an unpopular chairman and MD did for work for some time but now the staffers are up in arms over going unpaid for so long.
"The government should now tell us if it can run the airline. Else it must give us clearance to leave," said a senior pilot.
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