India's Loss-Making Flag Carrier Air India To Pare Costs By $227M
International Business Times
Published Jan 19, 2015 04:47AM ET
Updated Jan 19, 2015 05:01AM ET
India's Loss-Making Flag Carrier Air India To Pare Costs By $227M
By Sneha Shankar -
India’s state-owned carrier Air India announced Sunday that it will implement methods to cut costs by about 6 percent of its total outlays, or by 14 billion rupees ($227 million), in the next financial year. The move comes after the Indian government asked the loss-making airline to take measures to improve its financial condition.
As part of its cost-cutting measures, Air India reportedly said, in a statement on Sunday, that it would identify "surplus staff," freeze contractual hiring and discontinue flights which don’t meet fuel cost targets. These steps will help the airline reduce its variable spending of 140 billion rupees by one-tenth, Reuters reported. According to a Press Trust of India (PTI) report citing anonymous sources, Air India plans to move a little over half of its 22,500 staff to subsidiaries dealing with engineering and ground-handling services. This move is expected to generate significant savings for the airline in payroll costs.
In addition, the carrier is also looking at putting restrictions on staff travel and paring budget for official events, Air India officials reportedly said.
"Stay in five-star hotels for pilots and cabin crew or holding official events has been restricted and is to be undertaken only if is completely unavoidable. The budget for such activities has been reduced by 10 per cent as part of the cost-cutting measures," a senior company official told Mail Today, a local news network, adding: “Hotels near airport also entail lower transport costs and the crew can reach the airport in a shorter time. This is also the practice of other airlines."
In 2012, the Indian government had handed Air India a $5.8 billion bailout package, with funds to be pumped into the company over a period of nine years. The clearance to the funds came despite several ministers being skeptical of the move.
“These cost-cutting measures are part of a two-pronged drive to speed up our return to the break-even status. The measures are aimed at cutting costs under all controllable account heads by nearly 10 per cent,” Air India officials said, according to PTI.
Get The News You Want
Written By: International Business Times
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.