Air India (AI), the problem child in the government’s stable of “commercial" enterprises, is in the news again. Some would say, this time for the right reasons. It has launched a “revival plan" to get back on the rails.

If only that were true.

The plan, as reported in Mint on Monday, envisages AI achieving operational break-even by 2014-15 and also wiping out Rs14,000 crore of accumulated losses and Rs18,000 crore of debt by that date. In addition, AI plans to increase its fleet strength to 275 planes in five years, up from the current 148 aircraft. There will, of course, be no wage cuts and retrenchments in the workforce.

Illustration: Jayachandran/Mint

Then there is the question of fleet expansion. This can either be through renting of aircraft or purchasing new ones. Both options are expensive. In case it rents planes, there will be a constant cash outflow to meet rent payments, something that will put pressure on the balance sheet. In case of purchases, there are other costs as well: Given the scale of airline fleet expansion worldwide, the two main manufacturers, Boeing and Airbus, have difficult delivery schedules. The cost of waiting for the planes includes passengers moving to other airlines and ultimately market share loss.

There are other options for revival. They, however, are beyond the realm of the AI board to contemplate. Getting rid of employees and cutting costs is the way forward, if the financial aspects of the plan have any chance. And AI’s politically powerful unions are not about to let that happen.

Is AI in too much trouble for a revival plan to work? Tell us at views@livemint.com

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