FinMin asks AI for a firm plan on hiving off ground handling,MRO

Air Indias proposal to hive off its maintenance,repair & overhaul (MRO) and ground handling business into two separate units has drawn a sharp reaction from the finance ministry. The ministry has asked the national carrier to back the proposal with a detailed financial plan,said sources.

Air India,which has received a government bailout of Rs 3,200 crore in three financial years till date,had circulated a proposal for hiving off MRO and ground handling as separate business units (SBU) to various ministries before putting it up before the Cabinet committee on Economic Affairs (CCEA). These SBUs would enable the company to separate its core aviation activities from the rest and turn them into independent profit centres. The finance ministry is not satisfied with Air Indias business proposal. We have asked the airline to rework its business plan, said a civil aviation ministry official. The finance ministry had asked the carrier to submit its growth and revenue projections for these units. The Planning Commission too has asked for additional data from Air India on its business plans and financial feasibility.

The business plan initially proposed by the airline stated SBUs will break even in three years time. The proposal,mooted two years ago as part of its Turnaround Plan (TAP),will see almost half of Air Indias total workforce of over 30,000 absorbed in the two SBUs on a permanent basis. This will bring down its bloated employee to aircraft ratio from around 320:1 to more acceptable industry standards.