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Air India may get expat COO soon

Air India may get expat COO soon

New Delhi: National carrier Air India (AI) may shortly get an expatriate chief operating officer (COO) to oversee the turnaround of the loss-making airline that’s been bailed out by the government and urgently needs to find ways of saving money.

Five applicants have been shortlisted by the carrier. “They will be coming for the interviews on 27 March. All are expats," said a senior government official familiar with the process, who asked not to be named as he is not authorized to speak with the media. The names of the prospective COOs cannot be disclosed because most are employed with various airlines, the official said.

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The applicants are to be screened by a panel headed by civil aviation secretary M. Madhavan Nambiar. The others on the committee are Anand Mahindra, vice-chairman and managing director of Mahindra and Mahindra Ltd, Uday Kotak, executive vice-chairman and managing director of Kotak Mahindra Bank Ltd, and Sajjan Jindal, vice-chairman and managing director of JSW Steel Ltd.

The COO’s mandate is to work with chairman and managing director Arvind Jadhav to implement a three-year turnaround plan. The airline received fresh equity infusion from the government on 19 March, raising the equity capital to Rs945 crore, as part of the total agreed Rs2,000 crore proposed bailout. The airline is expected to make a loss of Rs5,400 crore in 2009-10, according to the civil aviation ministry.

At least 140 top global airline executives had applied for the job after advertisements were posted in September in The Economist magazine and the Financial Times newspaper. COOs and vice-presidents from European, American, Australian and Caribbean carriers were among those vying for the job, which includes completing the integration of domestic carrier Indian Airlines with AI, as Mint reported on 19 November.

The COO will be entitled to performance-linked pay and will be required to work with consulting firms that have been hired to draw up strategies for cost-rationalization and debt-restructuring. The move is not without its doubters. A senior AI official said the move may lead to the duplication of responsibilities. “We will positively get a COO before the end of the month, but this would create a separate power centre within the company," the official said.

The successful applicant will need to manage a delicate balancing act between fixing the firm and trying to make sure that there is no political backlash against the government.

The cabinet will decide how wage cuts can be implemented, loss-making routes dropped and bailout funds injected into the firm to keep it afloat as the turnaround process goes forward.

A top civil aviation ministry official, who also spoke on condition of anonymity, said the cabinet discussions will take at least a month. A note is being prepared for the cabinet in consultation with the finance ministry that will lay out the consequences of salary reductions and the dropping of flagship routes.

The airline has sought a letter of comfort from the finance ministry to help it raise its working capital limit and improve creditworthiness, which will help lower interest rates on the more than Rs16,000 crore of working capital loans on its books.

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