Internal bickering among
Air India 's (AI) top brass is threatening to unravel the financial turnaround plan put in place to help the ailing national carrier to step out of the red. What's more, the independent directors appointed on the board of the airline last year to help make its turnaround plan work are dissatisfied with the airline's management.
On Monday, Mahindra & Mahindra (M&M) vice chairman Anand Mahindra offered to resign from the board of the National Aviation Company India Ltd (Nacil) that operates Air India citing conflict of interest. In a letter to the civil aviation minister Vayalar Ravi, he has sought permission to step down from the board of Nacil.
In March last year, Mahindra along with Air Chief Marshal Fali H. Major (retd), FICCI secretary general, Amit Mitra and Ambuja Realty Group chairman Harsh Neotia were inducted as independent directors on the NACIL board to help the airline in its turnaround plan.
Fear is now looming large among the airline's top officials as the government has also indicated that some heads may soon roll in the airline, which has a debt burden of over Rs 40,000 crore.
According to civil aviation ministry officials, the current top management in the airline is unable to infuse confidence in the rank and file of the airline.
This leaves little scope for an effective turnaround. He said that the government cannot continue offering financial help for long.
Air India's five-year financial turnaround plan, which runs through 2010-14, envisages revenue enhancement and expenditure reduction over different phases.
But the airline also has largely failed to meet the target of the turnaround plan which called for a cut in costs by Rs 1,500 crore and increasing the revenues by Rs 1,200 crore by the end of 2012. The airline is expected to post losses of over Rs 7,000 crore during the current fiscal.
Despite desperate cost-cutting measures adopted by the airline, the average passenger load factor on AI's domestic flights was only 22.2 per cent and 67.9 per cent on international flights in 2010.
Smaller and relatively young low-cost carriers like IndiGo had an average passenger load factor of 83.8 per cent, the highest in the domestic sector last year.
Passenger load factor is the percentage of passengers carried compared to the number of seats offered on a particular flight.
The finance ministry is unhappy with its turnaround plan and is also not convinced that whatever money has been infused in Air India has been spent properly.
Finance minister Pranab Mukherjee has already made his displeasure known to civil aviation minister Vayalar Ravi when the latter recently met the former to seek Rs 2,000 crore additional funds for the national carrier in the upcoming budget.
However, the airline is expected to receive Rs 1,200 crore only as equity support for the next fiscal.
The government has already infused Rs 2,000 crore in two tranches of Rs 800 crore and Rs 1,200 crore last year as equity in Air India as part of the revival plan and financial restructuring of the airline.
Courtesy: Mail Today
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