Air India must cut costs to qualify for bailout: minister

A panel of Indian ministers has told flagship state-run airline Air India that it must cut costs in order to qualify for a government bailout.

"If the recovery (in the airline's performance) is visible, the support from the government will also be visible," Civil Aviation Minister Praful Patel told reporters in New Delhi late Thursday.

The airline "will have to provide a revenue enhancement and cost-cutting programme" worth about 20 billion rupees (429 million dollars), Patel said.

Based on the carrier's performance, the government would be able to decide "at the end of March as to what will be the final support which the government will provide," the minister said.

On Wednesday, Air India announced a net loss of 55.48 billion rupees (1.19 billion dollars) for the fiscal year ended March, hit by the global recession and low air traffic.

Patel said the government panel, headed by Finance Minister Pranab Mukherjee, would review the carrier's performance each month until March.

"We are broadly looking at an equity infusion linked to its monthly performance," Patel said.

He said in October that the government would inject 50 billion rupees into the airline in phases, but added that the handout would be conditional on measures to cut costs and increase revenues.

Air India has set up a committee, led by the carrier's chairman Arvind Jadhav, to seek ways to make the carrier profitable.

The airline announced plans in September to cut performance-related pay by up to 50 percent for over 7,000 employees, including top management.

But the carrier was forced to delay implementation of the plan after senior pilots staged a five-day work stoppage in protest.

The airline faces a new threat of disruption by pilots who have said they will launch a strike November 24 to protest cost-cutting proposals by the carrier.