Looks like the Indian government is getting set to perform a bailout of ailing flag carrier Air India, which has lost almost $1 billion in the last fiscal year. Indian Civil Aviation minister Praful Patel sounded an awful lot like Barack Obama talking about GM when he said that "it doesn't mean there is a checkbook open to Air India... It will be difficult for the government to keep continuing our support unconditionally."
In order for Air India to get the money (over $800 in the form of equity and loans), though, the government is forcing the airline to cut costs and become leaner and meaner (sound familiar?). Air India has to submit a cost-cutting plan to the government within one month, including a plan to cut personnel costs and dump unprofitable routes. Not that long ago, the airline attracted quite a bit of attention after deferring the salaries of its employees for two weeks; more recently, Air India's senior mangagement have been asked to work without pay next month.
Maybe keeping Air India afloat is a point of national pride; after all, the airline has always been the state-run flag carrier. But is the Indian government really going to be able to force a bloated, government-owned entity to slim down? Air India's main rival, the privately-owned Jet Airways, also posted a loss for the last fiscal year - but it was just under $200 million, which is a heck of a lot less than Air India's.
photo by hartlandmartin from Flickr, licensed under the Creative Commons
