New Delhi: The government is seeking to hire a new joint managing director to steer Air India Ltd’s turnaround and debt restructuring plan.
The Appointments Committee of the Cabinet (ACC), which is headed by Prime Minister Narendra Modi, has asked the aviation ministry to fill the position, which fell vacant in 2014, according to two government officials aware of the matter, both of whom spoke on condition of anonymity.
Air India has had two joint managing directors since it merged with Indian Airlines in 2007. Bureaucrat Vishwapati Trivedi was the first. Syed Nasir Ali, an Indian Revenue Service officer deputed to the aviation ministry, served as joint managing director from 2012 to 2014.
“The ACC did not extend the tenure of Ali any further and since then this position has been vacant. Now they want it revived. It is now felt that we need someone to be the eyes and ears of the government and help with the turnaround process,” said one of the two officials cited above.
Air India is weighed down by debt of Rs51,367 crore, which it piled because of new plane purchases over the past decade and working capital loans.
The airline in 2012 secured a bailout package, including Rs30,000 crore in equity infusion spread over 10 years, from the government, which allowed it, on average, to draw Rs3,000 crore every year.
The airline has seen its fortunes improve over the last fiscal year as fuel prices, which make up about 40% of an airline’s costs, dropped from a peak of $140 to $40 a barrel.
In 2015-16 its loss halved to Rs2,636 crore from Rs5,859 crore in the previous year on account of Rs2,704 crore of savings on jet fuel.
The government now wants to find ways to reduce the debt of the airline further. This includes nearly Rs28,000 crore owed to state-owned banks.
Among the various options being considered is the possibility of these banks getting equity in the company.
The second of the two officials cited above said that the airline also has to choose replacements for all its five independent directors, who completed their three-year term this summer.
The aviation ministry has only just started the process of shortlisting people for the position of independent directors.
“Given the airline is on government bailout this is not a good situation to be in,” the second official said. “Independent directors are more vocal about red-flagging any board decisions compared with internal members.”