Tuesday, August 16, 2011

Air India to tone down turnaround plan; revise fleet expansion targets.


MUMBAI: Air India, the country's ailing national carrier, is set to tone down its turnaround plan and revise fleet expansion targets when a government-appointed panel meets in Delhi on Wednesday. This is the first group of ministers meet to be held after Rohit Nandan took over as the chairman and managing director of Air India last week.

The revised plan, being dubbed as moderate , is likely to rationalise fleet acquisition and growth plans of the national carrier in the domestic market. The plan will be sent to the Cabinet for final approval after it gets clearance from the GoM. In the original plan, Air India was aiming to reach a fleet size of 248 by 2015-16 . "This has now been revised and toned down by Delhi to 245 by 2018-19 ," said an Air India official, not wanting to be identified .

Air India has a fleet of 124 aircraft, including wide-body and narrow-body aircraft. The revision in targeted fleet size will lower the amount of equity support the airlines will get from the government. "The government is likely to infuse . 37,000 crore into the airlines over the next 10 years compared to . 42,000 crore under the original plan," said a person with direct knowledge of the matter. "We are working on the turnaround plan and revising down expansion of operations .

In the new turnaround plan, we aim to increase fleet expansion marginally and also financial restructuring has to change. SBI Caps is reworking the targets and will come up with a revised plan within two to three weeks," said a senior government official. The ministerial panel will also discuss the issue of fuel supply to Air India, the official added. Last week, all the three oil marketing companies had refused to refuel Air India aircraft due to non-payment of dues, disrupting operations for more than four hours.

Petroleum minister Jaipal Reddy, who will also be present in the meeting, has reportedly been stern on the issue of payment default by Air India, which owes the oil marketing companies . 2,300 crore in fuel and interest costs. On the revised growth targets the AI official said, "There is an overall change in the growth targets we want for Air India in the domestic sector and also a re-look at the market share that we want to increase in the domestic sector." "It was widely accepted that Air India growth targets have been a little over the current market growth and there is a change in that position that was earlier approved in 2010," he said.

Air India, which initially wanted to focus on the domestic sector to arrest its slipping market share that has not gone above 15% for some time now, will focus more on international routes. Air India deploys 60% of its capacity on the international routes. Industry experts said that the government should not delay giving a go-ahead for AI turnaround plan any further.

Source:  http://economictimes.indiatimes.com

No comments:

Post a Comment