NACIL proposes cost-cutting measures, employees’ union ready to shoot it down

As The Indian Express reported over the last two days, NACIL’s unaudited losses for 2007-08 have more than tripled to a record Rs 2,144 crore. Its borrowings are close to its limit of Rs 8,550 crore and the company faces a daily deficit of over Rs 8 crore, according to an April-end estimate.

The crisis has been blamed on a range of reasons, including mismanagement, post-merger problems, overspending, an old fleet, overcapacity, undercutting and a complacent workforce, besides rising fuel prices. “The position is grim for the entire industry and more so for the national carrier,” said Civil Aviation Secretary Ashok Chawla. “We are going to have intensive reviews of NACIL every month with the first meeting set for Saturday. We will discuss how the financial position is unfolding through fare hikes and cost-cutting measures.”

Before that, though, NACIL needs to act on a radical cost-cutting wish list prepared at the end of April. The list is spread across rationalisation of routes and operations, aircraft maintenance and repair expenses, fuel management, distribution costs, employee costs and other expenses. For instance, it proposes withdrawal of routes not meeting even the cash costs, phasing out of old aircraft as they consume more fuel and are expensive to maintain, introduction of smaller aircraft on short-haul routes, a 25 per cent cut in sales promotion budget, cuts in wages/variable productivity linked incentives for all categories of staff and even discontinuation catering on flights of less than an hour.

Also, the wish list proposes disposal of surplus movable and immovable assets, deferment of delivery schedule/ sale of delivery slots of new aircraft, stopping dry or wet leasing of aircraft and disposal of old aircraft.

... contd.