Keep your seat belts on as the turbulence may not be over. That is the message as one looks at the mammoth 'To-Do' list in front of the Tata Group that looks at not only stopping the millions per day losses from Air India but also hopes for a smooth integration into it's aviation kingdom with siblings Vistara and Air Asia.
Let us talk losses!
First up the losses. The govt though has pumped over Rs 30,000 cr into the airline over the past decade, Air India continues to lose Rs 20 crore a day. Conservative estimates indicate that stabilizing the airline in its current form will require access to credit of up to Rs 10,000 crore annually. Air India's fleet of 127 aircraft are in dire need of upgrade and will add to the cost for owners sitting at Bombay House.
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Salary situation, the worrying wage bill
Then comes the people problem! Air India has in total close to 13,000 employees which will be the biggest challenge for Tata Sons. Though the new owners will get additional help as the Centre will clear the pending Rs 1,332 crore owed to the airline’s employees, it might come out with a voluntary retirement scheme (VRS) to further pare the wage bill. The current salary payout (post pandemic cuts) is at Rs 120 crore per month.
Meet the siblings, playing nice with Vistara & Air Asia
Finally the integration. With two already in the hangar, Tata's will face a Herculean task in making Air Asia, Vistara and Air India compliment each other for maximum efficiency. There are great schedule overlaps. Air India has a presence on all but six sectors where Vistara operates. The last thing Tata would want is for each of them chip away at the other’s traffic rather than teaming up to eat into the competition’s traffic.
From Corus, JLR to Tetley the top management at Bombay House has proved their mettle time and again with iconic acquisitions, the big question is can history repeat itself with Air India?