Pilots’ strike to hit AI turnaround plan

NEW DELHI: That state-run carrier Air India has been dragged into an abyss by its pilots is an understatement.

Banks and financial institutions that have restructured Air India’s debts and loans that amounts to `67,520 crore, now feel that the airline has pushed itself back yet again and reaching the milestones set in the turnaround plan that it has set for itself will take long to come by.

“This is the peak season. Their revenues will take a big hit. The worst would be the July-August- September quarter when traffic is at its lowest. The steep airport charges at Delhi would also affect traffic. So net, AI may struggle to meet targets they have committed as part of the TAP (Turn Around Plan). They are in a very very tough situation,” a senior official with one of the banks that has recast AI’s loans said requesting anonymity.

Air India’s debt restructuring has been done by a consortium of 19 banks, led by State Bank of India.

Air India’s debt restructuring plan has already hit a hurdle as banks have refused to convert a part of the short-term debt into equity.

According to the earlier plan, the banks were to recast `18,000 crore debt, of which about `10,500 crore would have to be converted into long-term one with a repayment period of 10-15 years and the rest was to be converted into equity. The banks had objected to the plan.

The government and banks are now working out a repayment period which is suited to both, the airline and the banks.

Analysts feel the airline should sort out the issue with its pilots at the earliest.

Amber Dubey, partner and head – Aviation, at global consultancy firm KPMG said, “The strike at Air India is unfortunate, especially given that this is the peak summer season. Stranded passengers may find it difficult to find seats on other airlines, and the few ones that do, may have to pay a significant premium. Foreign tourists would carry back unpleasant stories about India. It also puts the AI management in an uncomfortable position that has just recently succeeded in getting a `30,000 crore revival package from the ministry.”

“We hope that the issue gets resolved amicably at the earliest,” Dubey added.

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