Want bailout? Trim wages: Cabinet tells national carrier

The government has given a green signal to the Air India management on the sensitive issue of wage rationalisation of its employees. The cash-strapped carrier has been asked to ‘work towards’ trimming the wage bill — one of the key milestones in the airline’s revival plan. Approving Rs 1,200 crore bailout installment,the cabinet withheld decision on the operationalisation of Strategic Business Units (SBUs). At almost Rs 3,000 crore per annum,Air India’s wage costs comprise 17 per cent of its overall operating costs. The airline had earlier drawn a plan to cut wages by Rs 500 crore but was able to achieve only Rs 100 crore saving on this account. In its proposal,the airline had accepted that it had made little progress in achieving wage rationalisation goals. The Cabinet Committee on Economic Affairs (CCEA) cleared Rs1,200 crore as equity infusion in the loss-making carrier in its meeting on Thursday. “The infusion of enhanced equity fund would give a much-needed impetus to Air India for its revival plan,” said the government in a statement. As part of its turnaround plan,the carrier had received Rs 800 crore in February this year and the balance bailout amount of Rs 1,200 crore was linked to its performance on some key parameters. Post-merger,Air India lost Rs 2,226 crore in 2007-08,Rs 7,189 crore in 2008-09,and Rs 5,551 crore in 2009-10. A group of ministers under finance minister Pranab Mukherjee was set up to oversee its financial restructuring and implementation of a turnaround plan.