Beleaguered national carrier Air India unveiled an ambitious turnaround plan on Sunday that envisages the airline reaching operational break-even and wiping out the Rs14,000 crore of accumulated losses and Rs18,000 crore of debt on its balance sheet by 2014-15. The plan includes raising its fleet strength to as many as 275 planes in five years from 148 now
The maharaja’s woes are now further compounded. Already fighting to save itself from bankruptcy, it now has to deal with a pilots strike that has entered its fourth day. The airlines cancelled over 20 flights, including 15 from the national capital, and suspended bookings for the next 15 days.
The national carrier has lost market share, even as it has piled up accumulated losses of Rs7,000 crore and debt exceeding Rs15,000 crore.
A majority of Nacil employees rejected a proposal to cut 50% of their productivity-linked incentives (PLI), making it harder for the embattled carrier to argue its case for an equity infusion and soft loans from the government.
The debt-ridden, state-owned carrier announced a 50% cut in PLIs, that accounts for 30-50% of the salary of Air India employees, hoping to save around Rs700 crore. These incentives cost Air India Rs1,400 crore in 2008-09, a year in which the airline suffered losses of at least Rs5,000 crore.
The airline management has announced timely payment of salaries to its staff. It said determined efforts would be made to overcome the liquidity crunch and cut down costs, particularly in areas like rentals for leased aircraft, jet fuel, navigation charges and interest payments on fleet renewal.
Below is a timeline of the crisis:
March 2007: Air India and Indian Airlines post a loss of Rs541.30 crore and Rs230.97 crore respectively during 2006-07.
August 23, 2007: The government formally announces the merger of Air India and Indian Airlines into a new company called National Aviation Co of India Ltd, or Nacil.
March 2008: Nacil posts a loss of Rs2226 crore in 2007-08.
May 04, 2009 : Arvind Jadhav, a 1987-batch IAS officer, takes over as chairman and managing director of Air India. read story
June 12, 2009: Air India issues a circular that the June salary will be delayed by 15 days due to a cash crunch. read story
June 20, 2009: Arvind Jadhav writes a letter to his employees saying that the time has come for us to face the moment of truth.
June 24, 2009: Air India is asked to prepare a restrucuturing plan by Prime Minister Manmohan Singh in 30 days. read story
June 25 2009: Air India sets up turn around committee following the instruction of Prime Minister’s Office read story
July 3, 2009 : Air India staff strike for two-hours against delay in the payment of June Salaries. read story
July 8, 2009 : Air India ask its functional directors to work only on preparing turnaround plan till submission. read story
July 14, 2009: Union civil aviation minister Praful Patel officially announces that Air India has accumulated losses of Rs7200 crore with a loss of more than Rs5,000 crore in 2008-09. read story
July 20, 2009: Minister Patel announces Air India’s borrowings rose from Rs6550 cr in Nov 2007 to Rs15241 cr in June, 2009.
July 25, 2009: Air India executives and SBI Caps were asked by Committee of Secretaries to prepare a cost reduction initiatives to justify its demand of Rs15,000 crore bail out. read story
August 7, 2009: Air India chief Arvind Jadhav announces a turn around roadmap for next three years. read story
August 21, 2009: Air India said it will cut 50% of productivity lined incentives from its 31500 employees aiming at saving Rs700 crore read story
August 25 2009: Except one union out of 12 unions turned down the proposal of proposed 50 PLI cut and starts hunger strike. read story
August 29 2009: Air India to present its progress card before Committee of Secretaries and prove its case for equity infusion.
September 03 2009: Air India puts off domestic low fare service launch to November read story
September 22 2009: Two AI flights cancelled after few pilots start agitation read story
September 28, 2009: Perks cut put on hold but AI pilots stir continues read story
September 28, 2009: Talks between Air India management, pilots fail read story
September 30, 2009: Govt intervention to end pilots’ strike won’t help national carrier reach cost-cutting goal to qualify for rescue read story
October 6 2009: The losses are mainly on account of excess capacity in the industry and high jet fuel costs, said the official who did not want to be identified read story
October 20, 2009: In a 25 July meeting, the committee of secretaries had suggested Nacil prepare a cost-reduction proposal, to justify an equity infusion or any soft loan grant read story
October 21, 2009: Cash-strapped Nacil, which runs the state-owned airline, may get the money earlier because of pressure from lawmakers read story
November 9, 2009: Apart from stemming losses, recasting Rs16,000 crore debt and trying to pay for much-needed planes to bolster an ageing fleet, the COO will need to fight with entrenched unions opposed to plans for cost-cutting read story
November 10, 2009: The launch of an all-economy domestic service by Nacil had been expected to reduce airfares and help the state-run airline firm compete better with rivals Jet Airways (India) and Kingfisher Airlines read story
November 11, 2009: Airline board decides not to pay incentives to top management cadre; move meets with stiff resistance read story
November 12, 2009: Group of ministers says support to be extended after monthly review; proposal to be sent to cabinet for clearance read story
November 18, 2009 :Air India, which had posted an accumulated loss of Rs7,774 crore till now, appointed Booz Allen in October to look at costs across the board and suggest ways to save read story
January 3, 2010: Arvind Jadhav says Air India looking at cost cuts, outsourcing, and spinning off some units to regain profitability read story
January 5, 2010: Booz one of three advisers to airline; fee to be also linked to cost savings derived from its suggestions read story
January 12, 2010: The carrier is not likely to receive any more funds till the Union government presents its budget for 2010-11 read story
January 28, 2010: According to the minutes of the November meeting, Chidambaram wants the airline to put together a proper plan to reform its balance sheet read story
February 3, 2010: 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 read story
February 10, 2010: Dublin is the only airport in Europe where passengers can clear immigration for the US read story
February 14, 2010:Aviation experts say such measures can help only in the short term, the airline needs greater autonomy read story
February 16, 2010: The deal, however, is at a lower rate than Jet’s previous agreement with Gulf Air, which is returning the aircraft after deciding against extending its lease deal read story
February 18, 2010: The move, expected to yield Rs600 cr savings, comes as govt approves release of Rs800 cr equity tranche read story
February 21, 2010: State-owned oil marketing firms had threatened to halt jet fuel sale on credit beginning Tuesday read story
March 3, 2010: The airline is presenting a proposal to the civil aviation ministry, which will conduct a two-day review from 15 March after which a final proposal will be sent to the cabinet for discussion read story
March 4, 2010: Falling short by Rs75 cr of the approved sum, the national carrier may see a similar cut in the next infusion of cash read story
March 4, 2010: The airline, run by state-owned Nacil also put on hold an employee training plan proposed by consultancy firm McKinsey and Co read story
March 4, 2010: Air India has ordered 27 Boeing 787 Dreamliner aircraft and will begin inducting these from 2011 read story
March 5, 2010: The PMO cleared the appointment of the independent directors earlier this week, will issue orders soon read story
March 9, 2010: Air India wants to turn its maintenance, repair and overhaul (MRO) business and cargo operations arm into separate units read story
March 13,2010: The state carrier is expected to lose Rs5,400 crore in the year to 31 March as told by civil aviation minister Praful Patel to the Parliament this week read story
March 17, 2010: The success of Air India Express stems in part from the fact that its sales and marketing are taken care of by the Air India team, thus saving costs read story
March 21, 2010: The carrier plans sale of 10-year non-convertible debentures that will be backed by a sovereign guarantee by next week read story
March 23, 2010: The COO’s mandate is to work with chairman and managing director Arvind Jadhav to implement a three-year turnaround plan read story
March 28,2010: The bond issue is supported by a sovereign guarantee by the Union govt read story
April2, 2010: The government has already put Rs945 crore into Air India, most recently through two infusions totalling Rs800 crore in February and March read story
Apr 5 2010: The committees, which will also have representatives from the airline and the civil aviation ministry, will decide on the future course of the airline and take key decisions read story
April 7, 2010: The new turnaround plan will effectively replace a previous one proposed by the airline in August read story
May11,2010: The carrier plans to connect new domestic city pairs from 29 March onwards and extend its international flights to South Korea’s capital Seoul in a bid to increase asset utilization read story
May 12,2010: Australian firm Cato Purnell Partners has been shortlisted for the exercise, which may cost as much as $1.6 mn read story
May 17 2010: This will be the board’s first meeting with Mukherjee since its appointment in March read story
May 27,2010: The airline said as many as 73 flights were affected, with revenue losses running into Rs12 crore read story
May 30 2010: At least 16 banks have queued up with offers to refinance a $475 million aircraft acquisition loan as part of its restructuring programme read story
May 31,2010: The move is aimed at concentrating on non-stop connections instead of one-stop flights on its long-haul routes and also meant to attract travellers to visit India during the Commonwealth Games in October read story
June 1, 2010: Nacil is preparing a turnaround strategy for Air India, which accumulated losses of Rs8,461.88 crore between fiscal years 2007 through 2009 read story