‘Satyam model’ to rescue airlines losses
Centre wants to avert Kingfisher-like crisis, to save jobs
By : DC Correspondent
Update: 2014-08-01 05:09 GMT
New Delhi: The civil aviation ministry is considering the “Satyam model” for rescuing loss-making private airlines in future that are headed the Kingfisher way. Officials will discuss this soon with civil aviation minister Ashok Gajapathi and see if it is feasible. Sources said the objective was to save jobs in financially-strapped airlines and ensure that thousands of jobs are not lost, such as when Kingfisher Airlines shut down operations.
But there will be no financial bailout of private carriers by the government.In the Satyam Computers case in 2009, when there was a real danger of it going bust, the then UPA-1 government stepped in and had asked government-picked nominees to take over its board. The eventual sale of the company to a new owner saved thousands of jobs.
But skeptics note Satyam was a case of alleged corporate fraud, and thus there was a difference between that and loss-making airlines. Incidentally, the DGCA is doing a financial audit of airlines, with carriers like SpiceJet under the scanner due to acute financial stress. “The focus is to save jobs. We don’t want a repeat of the Kingfisher situation when thousands of jobs were lost,” a ministry source said.
Government sources said the ministry was waiting for the DGCA to submit its report on the airlines’ audit as soon as it is completed. On SpiceJet, sources said it is making losses and the government was aware that its frequent promotional fare offers were a way to raise cash quickly to meet working capital requirements. Once the DGCA report is in, things will get clearer whether any airline is ailing to such an extent that it could head for closure.