New Delhi: Beleaguered flag carrier Air India will continue to accumulate losses for at least another seven years, the Union civil aviation ministry told a group of ministers (GoM) meeting on Wednesday.
“The projections are that even at the end of 2017, we will still be in losses,” an aviation ministry official who was present at the meeting told Mint on condition of anonymity. “That is not a situation the government can accept. All options are open now.” Union home minister P. Chidambaram had asked for an extrapolation of Air India’s balance sheets in a GoM meeting in November.
Air India, run by National Aviation Co. of India Ltd, has already accumulated losses of Rs7,200 crore and is saddled with debt of Rs15,241 crore. It is making payments for 111 aircraft worth Rs50,000 crore.
Wednesday’s hour-long GoM meeting was attended by Chidambaram, finance minister Pranab Mukherjee, petroleum minister Murli Deora, civil aviation minister Praful Patel and Air India chief Arvind Jadhav.
“These are testing times for the aviation industry... Extraordinary measures need to be taken,” Patel said after the meeting. The minister added the airline was unlikely to meet its target of reducing costs by Rs2,000 crore by March. Air India has shown savings of just Rs753 crore in the previous six months.
Ministers also slammed the airline’s restructuring plan and refused additional equity infusion until it achieved the cost-saving target.
Air India is seeking Rs1,200 crore for the fiscal year ending March 2011, as part of a Rs2,000 crore bailout package promised by the government to raise its paltry Rs145 crore equity. The government has approved Rs800 crore for the ongoing fiscal year.
“The GoM felt there was no revival plan... They have asked us to prepare a cabinet note without sweetening it,” the ministry official mentioned earlier said.
Another official said the civil aviation ministry has been asked to prepare a cabinet note outlining the airline’s cost-cutting steps.
The ministry, in the note, is likely to seek permission for slashing the wages of more than 30,000 employees and creating three subsidiaries for cargo, ground handling, and maintenance, repair and overhaul, the official said.
“We require tough decisions howsoever unpalatable they maybe. The shareholder has to give a green signal,” a third government official who was at the GoM meeting said.
PTI contributed to this story.