AI to cut cost by Rs 3,000 crore

The government is likely to infuse additional equity into ailing Air India [ Images ], which has evolved a major revamp plan to cut costs by Rs 3,000 crore (Rs 30 billion) and increasing revenue by Rs 2,000 crore (Rs 20 billion) every year, Civil Aviation Minister Praful Patel [ Images ] said on Wednesday.

"One step would be induction of equity and the other restructuring high cost debt to low cost debt," he told reporters in after holding separate meetings with Air India employees unions and the management.

A draft note on equity infusion in Air India, prepared by the civil aviation ministry, is being sent to Cabinet Committee on Economic Affairs, Patel said.

He said a series of measures to cut costs and enhance revenues would include returning leased planes and leasing out some new ones.

Air India, which is faced with losses estimated at over Rs 7,200 crore (Rs 72 billion), has undertaken a major revamp plan parts of which have already come into effect, Patel said.

"Air traffic has improved over the last six months and overall market scenario has definitely witnessed a slight improvement in the last month or two and that does send out a signal of cautious optimism that aviation industry would lead to a road to recovery though it may not be as thick as we witnessed a few years ago," he said.