Air India board meet to weigh spinoffs today

A crucial meeting of the board of directors of Air India is scheduled for today where, in all likelihood, a long pending proposal to spin off the airline related businesses into separate subsidiaries would be taken up.

The business of acquiring and operating aircraft would remain with the holding company.

Some months back, the top management of Air India had mooted a plan to set up five strategic business units (SBUs) which would ultimately be spun off into separate subsidiaries and thus independent profit centres.

These were low-cost operation of AI Express, the cargo airline, MRO (for components and airframe), ground handling and related businesses.

As per this plan, the cargo airline SBU is headed by Anita Khurana, component MRO by Vipin K Sharma, airframe MRO by K Unni, ground handling by A K Sharma and related businesses by Amod Sharma.

The AI Express operation is being handled by a general manager whereas the SBU plan envisaged continuance of Arvind Jadhav as the chairman and MD of Air India, the airline.

Though this plan has been operational internally, the modalities of spinning off SBUs into separate subsidiaries would be discussed at tomorrow’s meeting.

Sources point out that though such a spinoff may provide benefits, issues such as service tax, royalties etc could become fresh cost heads and need to be looked into.

If the spinoff plan is approved, it may also help the airline in managing its mammoth employee strength better.