The Centre has decided not to proceed with an IPO for the national carrier till the company formed by merging Air India and Indian Airlines is able to deliver a good financial performance and attract a good price. While IA has been making losses for years, AI has not been able to touch the record profit level of Rs 333 crore of 1992. In the past five years, the Maharaja has been making profits in the range of Rs 110 crore and Rs 14 crore on an equity base of Rs 153 crore.
So in the interim, the government has decided to offer a 5% to 7% equity to employees as ESOPs. The ministry is going to move for Cabinet approval for this in coming weeks. “The merger has left some employees unhappy. By making them feel as owners of the new carrier, we want to enlist their full support in the proposed turnaround of AI,” said the official. Meanwhile, National Aviation Company of India Ltd (NACIL) (formed by merging AI and IA) is hoping for major savings with proposed route rationalisation.
Read more in The Economic Times article.
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