Centre directs asks SBI Cap to review Air India's Turnaround Plan

New Delhi: The government has asked SBI Capital Markets to review Air India’s Turnaround Plan (TAP) and submit a report to it within three months, a move which comes following “drastic changes” in the ground situation in the last three years.[caption id=“attachment_2267350” align=“alignleft” width=“380”]  An Air India aircraft. PTI[/caption] SBI Capital Markets, which is the investment banking arm of public sector lender SBI, has been asked by the civil aviation ministry to carry out a thread bare analysis of TAP, which the erstwhile UPA dispensation had approved for the carrier in 2012, entailing a Rs 30,000 crore bailout package with certain riders, sources said today. “The ministry feels that the situation in the aviation industry has undergone sea change since 2012 when Air India’s TAP was put in place for ten years and this requires a revisit of the plan,” they said. The SBI Cap has been mandated for this purpose and would submit it reports in three months to the government on the way forward for the national airline, they said. Also, an Air India Board member had, in April, pitched for a complete re-look of the plan, citing changing micro-economic situation. “What you actually need is a complete re-look at the airline’s revival plan,” an Air India independent director had told PTI. The government had come to the rescue of the carrier on the conditions that it would achieve certain targets in absolute numbers like seat factor, number of aircraft in the fleet, on-time performance and revenue among others in each year, the sources said, adding that the carrier has not yet met most of these “milestones.” “Moreover, the plan had not envisaged the Jet-Etihad deal as well the entry of new operators like AirAsia India and Vistara on the horizon as well as the oil prices, which declined by 39 percent also fiscal,” they said. Besides, the delay in the creation of two separate subsidiaries - one for the engineering and MRO and other for the ground-handling - have also resulted in Air India failing to achieve the desired results, the sources said. “Even the asset monetisation programme, under which the national carrier was expected to mop up Rs 5,000 crore over a year’s horizon has not yet taken off. At the same time, the induction of the narrow body 320 planes in the fleet was also delayed,” sources said. The airline is saddled with a debt of about Rs 40,000 crore that includes long-term loan taken for aircraft purchase and working capital loan. It has accumulated a loss of close to Rs 30,000 crore. Air India has reported losses to the tune of Rs 5,389 crore and Rs 5,490 crore respectively in the fiscal 2013-14 and 2012-13 respectively. For the previous fiscal, the results of which are yet to be announced, the consolidated net loss is pegged at about Rs 5,400 crore despite a lower fuel bill on account of a steep decline in the oil prices. The airline has managed to carry 44.48 lakh passengers in the last four months, garnering only 10.89 percent market share during the period. Besides, the seat factor on its flights during the January-April period of the current year stood at 79.25 percent. Also, its average on time performance, which is one of the key parameters of its turnaround plan, from four major metros-Delhi, Mumbai, Hyderabad and Bengaluru - was 82.35 percent in April. PTI