GoM unlikely to take up Air India demerger

The crucial meeting of the group of ministers (GoM) on aviation scheduled to be held today is unlikely to take up the demand for demerger of Air India (AI). Instead, the GoM is expected to evaluate cost-saving measures undertaken by AI in the last few months and decide on further equity support to be given to the beleaguered national carrier.Interestingly, the GoM meeting comes when even the first tranche of Rs 800 crore as equity support to Air India is yet to reach the airline. Parliament approved this payout in December, but the money has still not reached AI. Meanwhile, the airline continues to bleed, with working capital debts reaching a staggering Rs 17,000 crore.“We have been forced to seek more loans from banks just to keep the airline running… it continues to be on ventilator support. Even the promised Rs 800 crore has not reached us,” a senior airline official said.Another official said AI has managed to narrow the gap between revenue and deficit by Rs 150 crore, but is still running up losses daily.On any possibility of a demerger of AI into erstwhile Air India and Indian, officials in the Ministry of Civil Aviation point out the futility of such an exercise. “The plan is to create separate strategic business units for functions such as ground handling, MROs, cargo, etc, where each unit becomes an independent entity and services not just Nacil, but also other airlines. How can this be done if a demerger were to happen? A demerger does not make sense at all,” said an official. The officials concede that barely 25% of the merger process is complete so far, but feels things are moving in the right direction. Deploring the decision to begin the merger process by merging manpower of the two carriers first, they say an operational merger should have been initiated first. “We have completed the merger on executive director and director level positions and work has begun on the general manager level. But yes, crucial operational functions such as flight bookings, ticketing, etc are still done independently for the two airlines.” The GoM, headed by finance minister Pranab Mukherjee, includes ministers of civil aviation, home, law, commerce and tourism.