State run National Aviation Company of India (Nacil), which runs Air India and Indian Airlines, on Tuesday said that it would receive the
first installment of equity infusion by the government worth Rs 400 crore by January.
Based on a review of the company’s cost-cutting measures, the group of ministers on civil aviation, led by Finance Minister Pranab Mukherjee, has recommended the equity infusion.
Civil aviation minister Praful Patel announced last week that the government would infuse Rs 800 crore into the carrier that suffered a loss of Rs 5,548 crore in 2008-09.
“Further instalments would be tied up to the milestones of savings effected on account of cost-cutting exercise at various levels,” said the company.
Simultaneously, the airline has been taking measures to enhance revenue and reduce costs. Last month, Mr Patel said Air India planned to cut costs by Rs 3,000 crore and increase revenue by
Rs 2,000 crore over a period of time.
“We are simultaneously taking effective measures to enhance revenues to the extent feasible in today’s market environment. We will also aggressively rationalise its fleet size and network, besides pruning non-core activities in the coming months,” said Nacil.
The airline said that it was trying to resolve the issues concerning the delayed payments of the productivity-linked incentives (PLI) to its employees. It is also putting in place a plan to clear arrears to vendors after posting higher sales since August.
Domestic market share has increased from 16.6% in August to 18.6% in October 2009. Also, it has reported better bookings for December, January and February.
The domestic aviation industry, which suffered a combined loss of $2 billion last year, is on the road to recovery.
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