Dec. 30: Much to the relief of cash-strapped national carrier Air India, the Cabinet Committee on Economic Affairs (CCEA) on Thursday gave the crucial go-ahead needed for equity infusion of Rs 1,200 crore from the Centre.
The CCEA also made it clear that Air India would have to undertake wage rationalisation of employees of the unified national carrier, which could prove to be a contentious process. Air India will now begin negotiations with its unions on this issue.
“The infusion of enhanced equity fund would give much needed impetus to the Air Indiafor its revival plan... The government had earlier released `800 crore in February, 2010, as equity induction in Air India Ltd. for its revival plan,” the government said in a statement. Welcoming the Cabinet approval, the civil aviation minister, Mr Praful Patel said, “This will not only help restructuring the airline, but will also shore up its finances.”
The airline is expected to seek another `Rs 2,000 crore more from the government for the next financial year. The airline is also looking to make its Strategic Business Units operational. Meanwhile, the Cabinet Committee on Security has discussed the proposed new ground-handling policy which has been challenged by airlines in the Delhi High Court.
So far as the move for pay harmonisation and rank rationalisation between employees of Air India is concerned, the airline management will soon begin talks with the unions.
In a statement, Air India CMD Mr Arvind Jadhav, said, “Government support onwage and wage related issues will enable the management to initiate discussions with the unions/associations on a wide range of issues, which includes — harmonisation of working conditions across all sectors of activities of Air India (and) “streamlining compensation packages across all sections of employees.”
He added: “We will start the process of discussions with them in three months. The streamlining of compensation packages is also expected to prune the wage bill of the airline to some extent.
“Centre’s decision in approving equity will help Air India to operationalise its financial restructuring plan,” Mr Jadhav added.