Mumbai: Boosting employee morale and turning Air India around financially top the agenda of the carrier’s new chief.
“My challenge would be bringing back smiles to the face of Air India employees and (restoring the) financial health of Air India,” Rohit Nandan, 54, who assumed charge as chairman and managing director of the carrier on Friday, said in an interview. “This change of management will be done through a participative and consultative process.”
Nandan replaced Arvind Jadhav, who had been heading Air India since May 2009.
“I do not want to comment on anything about what happened in the past. I have taken up this challenge with a positive outlook,” said Nandan, who was joint secretary, ministry of civil aviation, till he took up this assignment.
“I have had many challenging assignments in my career and turning around Air India will not be the most challenging one,” said the Uttar Pradesh cadre Indian Administrative Service officer. He will head the national carrier for at least three years.
The government is considering a series of proposals to back the airline by infusing equity in excess of the Rs 5,000 crore originally envisaged.
Air India had debt of Rs 42,570 crore on its books and accumulated losses of Rs 22,000 crore as of 31 March.
The cash-starved airline could pay April and May salaries to its employees only on 28 June, according to Air India executives. It’s yet to pay productivity-linked incentives, accounting for around 70% of pay in some cases.
“The new chairman will bring new energy to the entire organization that will boost the morale of employees and motivate them to work as a team. Certainly, he will try to reduce losses,” said Nasim Zaidi, secretary, ministry of civil aviation.
Zaidi said the government is examining a turnaround and financial restructuring plan for Air India. A group of ministers is closely monitoring the airline’s turnaround measures that are currently under way.
According to Zaidi, the government is examining a three-way proposal to help revive the carrier.
“There are three elements in the new proposal—an upfront equity infusion for immediate relief, fund infusion for covering current operating losses, and payment for meeting aircraft loan requirements. The government will take a decision on these proposals in a month,” Zaidi said.
From the current Rs 5,000 crore bailout, Air India got Rs 800 crore in 2009-10, Rs 1,200 crore in 2010-11 and ad hoc equity infusion of Rs 710 crore in the current fiscal. The cabinet committee on economic affairs has approved another equity infusion of Rs 1,200 crore.
The airline is now seeking Rs 6,600 crore as an upfront payment. Apart from this, it wants an additional Rs 5,736 crore infusion of equity over the next 10 years to fund cash deficits.
Air India has made an after-tax loss of about Rs 6,994 crore and Rs 5,552.44 crore in the last two fiscal years, respectively. It has also seen multiple industrial disputes in this period, with a loss of Rs 200 crore due to a pilots’ strike in May.
“I am going to talk to the unions regularly and share the problems and prospects,” Nandan said.
Employees of all ranks are demoralized and frustrated due to the past policies of the management, said J.B. Kadian, general secretary of the Air Corporation Employees Union (ACEU). Kadian was sacked by Jadhav for leading a strike in May 2010 and later reinstated.
“We hope the new chairman and managing director will initiate steps to make Air India a viable and profitable organization for which the ACEU has extended its fullest support and cooperation,” Kadian said.
Air India needs strong private sector talent, said Craig Jenks, president of Airline/Aircraft Projects Inc., a New York-based air transport consulting and advisory services firm. Air India had hired private sector executives to head the airline’s operational functions during Jadhav’s tenure, but the move didn’t succeed. “It was the right concept but not well implemented,” Jenks said.
Nandan’s immediate focus should be to ply the Boeing 787 planes that Air India is getting on certain routes and marketing these exceptionally well, Jenks said. Air India had made losses after using new Boeing 777 planes on US routes two years ago.
The carrier was scheduled to get the first of its 27 Boeing 787s, popularly known as Dreamliners, in September 2008, but delivery has been pushed back to the second quarter of calendar year 2011.
Air India is at an irreparable stage and Nandan and his team can only minimize the damage, said Kapil Kaul, chief executive officer (Indian subcontinent and Middle East) of the Centre for Asia Pacific Aviation, an international aviation consulting firm.
“Nandan has to give his people the healing touch and bring them back to the purpose. Then he will have to make a genuine and credible turnaround plan,” Kaul said.
According to the latest plan submitted to the government, Air India is seeking a total equity support of Rs 42,920 crore till fiscal 2021. It also wants government guarantees for aircraft loans worth Rs 30,584 crore till fiscal year 2021.
Nandan is confident about getting government support. “Give me some time. I am setting the agenda for the turnaround of the airline,” he said.