Air India could soon be managed by a board if the turnaround plan being devised by the government is approved.
The central government is making plans for the organisational and financial turnaround of the national carrier. Quoting an official close to the development, Mint reported that "the plan is to make Air India stand on its own feet so that it can be sold in future."
Critical decisions are taken by the directors of a 'board-managed' company and not by the promoters who are not part of the boards. So in future, if Air India becomes a board-managed entity, it would result in less interference from the government in the issues related to the airline.
Earlier this week, civil aviation secretary RN Choubey had claimed that the new turnaround for Air India will be cleared by the end of September. Choubey said, "We will take a call whether this can be done bilaterally between the aviation and finance ministries or whether we have to go to the cabinet for approval."
Currently, Air India has Kumar Mangalam Birla and Y.C. Deveshwar as non-official independent directors. There is a plan to now appoint one more independent director from the private sector.
Air India was founded by JRD Tata as Tata Airlines in 1932 and since then it has been led by illustrious private sector officials. JRD Tata himself remained the chairman of the airline for 25 years, later another major business tycoon Russi Mody became the joint chairman of Air India and Indian Airlines. Lately, the national carrier has been headed by the bureaucrats.
The government's plan to privatise the indebted "Maharaja" did not attract bids from any player earlier this year. It eventually postponed the divestment plan claiming poor investment climate on the back of rising costs of running airlines because of the rise in the crude oil prices in the international market.
It is to be noted that the UPA government had devised a plan of a turnaround to infuse Rs 30,000 crore in Air India for a 10-year period starting 2012, provided the airline met certain performance-related targets. However, the plan seems to have failed miserably.
