Air India to seek Cabinet nod for strategic business units

New Delhi, Sep 14 (PTI) In its bid to speed up a
turnaround, Air India would seek the approval of the Union
Cabinet to operationalise its six Strategic Business Units
(SBUs) when the government considers an equity infusion of Rs
1,200 crore into the ailing carrier.
The Civil Aviation Ministry, in a note to the Cabinet, is
likely to seek approval for operationalising the SBUs relating
to low cost airline, cargo, Maintenance, Repair and Overhaul
(MRO), grounding handling, engineering and related business so
as to enhance the airline's revenues.
The Cabinet Committee on Economic Affairs may take up the
issue later this month when it also considers infusion of Rs
1,200 crore as equity, sources said. The government had in
February infused Rs 800 crore as equity into the carrier.
The government is looking at equity induction in a phased
manner based on the performance parameters of Air India, they
said.
In 2007, when the erstwhile Air India and Indian Airlines
were merged into the National Aviation Company of India Ltd
(NACIL), it was decided that the six SBUs would act as
separate profit centres.
The NACIL, which wants to review all agreements with its
14 unions, is also likely to seek government's nod to start
re-negotiations with the unions, two of which were
de-recognised following a flash strike three days after the
May 22 plane crash in Mangalore.
At present, there are 10 wage agreements signed between
these unions and the management. The employees' unions say
that the airline wage bill was 18 per cent of the total
turnover as against a global average of about 22 per cent of
total turnover for most international carriers.

The unions have said that the management had assured them
that their views would be considered before finalising the
company's turnaround plan, but the two sides are yet to have
any concrete discussions on it.
The plan for financial restructuring and turnaround till
2014-15 focuses on Air India achieving a break-even in its
operations by 2015.
Under it, the national carrier intends to get working
capital loans through a mix of bonds guaranteed by the
government with longer tenure and bullet payments. The company
could also sell or lease land and building to raise working
capital.
In order to beef up revenue generation, the national
carrier has decided to appoint a Chief Strategy Officer who
would report to Chairman and Managing Director Arvind Jadhav.
The CSO would be responsible for developing and managing
the Business Transformation Office (BTO) and ensure that the
turnaround strategy is translated into action. The BTO would
identify and track strategic initiatives through execution.
According to official estimates, Air India is expected to
incur a loss of Rs 5,656.62 crore in 2009-10. The airline had
suffered a loss of Rs 2,226.16 crore in 2007-08 which rose to
Rs 5,548.26 crore the following year. PTI ARC
MYR