To ensure Air India sticks to a time-bound turnaround programme, the government today decided to release funds to the cash-strapped state-owned carrier Nacil on a monthly basis instead of handing out bulk amounts.

The group of ministers chaired by finance minister Pranab Mukherjee that was asked to decide on the extent of government support to Air India met today and asked the national carrier to save Rs 2,000 crore by undertaking cost-cutting measures till March next year. Sources said the GoM told the AI management in no uncertain terms that it had to shore up its revenues and start acting on cutting costs.

Addressing the media after a 90 minute-long meeting of the GoM, civil aviation minister Praful Patel said the carrier “will have to provide a revenue enhancement and a cost-cutting programme to the extent of at least Rs 2,000 crore by March which will be giving a direction on the way forward. If recovery is visible, so will the government's support for further equity (infusion).”

The airline is in the red, having accumulated Rs 7,200 crore loss till March 2009. From its initial proposal for equity infusion and soft loans, the carrier seems to have scaled down its demands.

Patel said the government support will be for equity infusion alone.

Based on the carrier’s performance till March next year, the government will deliberate on the total equity infusion. The GoM, headed by finance minister Pranab Mukherjee, was given a presentation on the cash-strapped carrier’s plans to reduce costs and enhance savings by CMD Arvind Jadhav and civil aviation secretary M Madhavan Nambiar.

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