21 Apr 2012

Operationalisation of Air India Engineering Services Limited (AIESL) and Air India Air Transport Services Limited (AIATSL) as New Subsidiary Companies of Air India

12-April-2012:The Cabinet Committee on Economic Affairs today approved the proposal to hive off Maintenance, Repair & Overhaul (MRO) business of Air India Engineering Services Limited to tap the potential of nearly US$ 1.5 billion MRO business in the Asia Pacific Region. The Turn Around Plan (TAP) & Financial Restructuring Plan (FRP) for Air India has supported the move to hive off the MRO business from Air India and develop it as an independent business and profit centre.

Justice Dharmadhikari Committee has also recommended this measure. Air India will provide the required equity for capital expenditure to the extent of Rs. 375 crores over a period of 3 years. This would be based on equity support received by it from Government of India as part of its FRP. The company is projected to be a profit making company from financial year 2017-18. About 7,000 employees of Air India will migrate to this new subsidiary company. 

The Government has decided to operationalise Air India Transport Services Limited as a new subsidiary of Air India to hive off Ground Handling (GH) business of Air India in order to develop it as a separate profit centre. This would be ensured by inculcating the improved quality services benchmarked to global standards, new work culture with customer focus, quick response to customer requirements, reduction in overhead costs, improved productivity on a low cost plateform, accountability for growth and profits etc. This hiving off has been recommended in the TAP & FRP of Air India supported by Justice Dharmadhikari Committee. 

Air India will provide the required equity for capital expenditure to the extent of Rs. 393 crores over a span of 12 years. This would be based on equity support received by it from Government of India as part of its FRP. 

This new subsidiary is projected to make profit from current financial year itself. 

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