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Air India to separate ground handling and MRO subsidiaries

13-Apr-2012 8:32 AM

India's Civil Aviation Minister Ajit Singh said (12-Apr-2012) the Government has approved plans to separate Air India's engineering and ground handling services into two separate subsidiaries. This forms part of the carrier's Turn Around Plan (TAP) and Financial Restructuring Plan (FRP) for Air India with the aim to develop the units as an independent business and profit centre for the carrier. Details include:

  • MRO: The proposal involves the separation of the MRO business of Air India Engineering Services Limited to "tap the potential of nearly USD1.5 billion MRO business in the Asia Pacific Region". Air India will provide the required equity for capital expenditure to the extent of INR3.75 billion (USD72.7 million) over a period of three years. This would be based on equity support received by it from the Indian Government as part of its FRP. The company is projected to be a profit making company from financial year 2017/18. About 7000 employees of Air India will migrate to this new subsidiary company;
  • Air India Transport Services Limited: Will be operationalised as a new subsidiary of Air India to hive off Ground Handling (GH) business of the carrier to develop it as a separate profit centre. The separation has been recommended in the TAP and FRP of Air India supported by Justice Dharmadhikari Committee. Air India will provide the required equity for capital expenditure to the extent of INR3.93 billion (USD76.2 million) over a span of 12 years. This would be based on equity support received by it from the Government as part of its FRP. This new subsidiary is projected to make profit from current financial year itself. [more - original PR]

Air India unions have expressed reservations over the plan, as noted by NDTV, with a meeting of seven unions to be held on the matter on 13-Apr-2012.