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Sick PSU Air-India shaping up to post profits

Air-India has become the first among the loss-making public sector undertakings to retain lower retirement age of 58 years for staff. The move is part of cost-cutting and other measures initiated by its management. It has also adopted a multi-pronged strategy to achieve early turnaround and return to profitability.

According to Air-India sources, the airline has budgeted a much lower net losses with operational losses not likely to exceed Rs 500 million.

The airline expects to further achieve savings to the tune of Rs 600 million over the years, on account of its decision to retain the retirement age at 58 years.

The airline has already frozen recruitment and initiated redeployment of manpower from non-operational areas to operational areas and introduced schemes like shorter working week and leave scheme to curtail expenditure on wage bills.

The recruitment freeze alone has given the company a saving of Rs 200 million while there was a saving of Rs 60 million on account of the two-year leave scheme and reduced working week introduced last year for its personnel, the sources said.

More than 500 people had applied for the shorter working week which provides for an employee to work for three out of five days of the week and get 60 per cent of emoluments and the two-year leave scheme. More than two hundred employees had already taken advantage of this twin scheme.

The airline is opting to be excluded from the government decision to increase the retirement age and accepting its recommendation to restore the earlier superannuation age of 58 years for its staff. This is expected to bring considerable savings in its expenditure on manpower.

As many as 339 employees from all categories of the airline staff will retire on June 30, following the government nod to retirement at age 58. They include three of the rank of functional directors. They will be paid three months' salary in addition to the normal retirement benefits received by them, the sources said.

The sources scotched as disinformation about the airline's fiscal health having reached a point of no return. They said, on the contrary it would be the first among the sick public sector undertaking to soon return to profitability.

The airline has had a proud track of earning profitability in 36 out of 46 years of operation. The profits had ensured that the Air-India today has assets of more than Rs 100 billion on an equity base of only Rs 1.24 billion.

While attributing the losses to the global ups and downs suffered in the airline business during the last more than one decade, he said all major airlines in the world had without exception suffered downturn in financial results, but this had caused no threat to Air-India's survival. Its wings had regained its strength and soaring high once again, following a number of decisions to face up to the market challenges.

The sources also denied that the airline had shelved its fleet renewal and expansion scheme and said it was considering as part of fleet renewal induction of both medium-capacity long-range aircraft and small-capacity long-range aircraft to meet the requirement of the traffic growth of the new millennium.

UNI

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