After the finance ministry refused to extend state-owned Air India the crucial Rs 1,200-crore lifeline,the civil aviation ministry has said it will once again ask the airline to deliver on the promises made to the group of ministers (GoM),headed by Union finance minister Pranab Mukherjee,to avail second installment of the governments bailout package. Reportedly,the finance ministry is unhappy with the airline over its inability to rationalise wages to bring down its annual wage bill of Rs 3,000 crore,sources said. Air India had committed to wage reduction by at least Rs 500 crore when the first bailout installment of Rs 800 crore was granted to the carrier in February this year. However,it was able to cut wages by only Rs 100 crore due to rescheduling of operations and allowances. On the other hand,Air India did perform better on some of the other parameters,including reduction in losses,improvement of passenger revenues and growth. Wage reduction remains a gray area as the proposal from the civil aviation ministry needed to be approved at the highest level by the Cabinet Committee on Economic Affairs (CCEA). However,the CCEA did not take any call on the politically sensitive issue. An official source said the government was unwilling to bite the bullet on the wage issue,which is critical to airlines turnaround. At the same time,a government wing (finance ministry) is insisting on wage cuts to release further equity,the source said. A board member told The Indian Express that independent directors have so far advocated deferring the decision on wage cuts until an appropriate time. However,Ambuja Realty chairman Harsh Neotia,who had been appointed independent director on the companys board,indicated that wage rationalisation was critical to turnaround plan,and emphasised on revenue enhancement from other related businesses like ground handling and MRO.
