Page last updated at 18:18 GMT, Wednesday, 14 October 2009 19:18 UK

Bailout to keep Air India flying

Aviation minister Praful Patel
Praful Patel says the airline is already showing signs of recovery

The Indian government has agreed to help keep the ailing national carrier, Air India, flying with an injection of more than £689m ($1.1bn).

The large financial aid package would be paid out in phases, Aviation Minister Praful Patel said.

In return the airline must agree to restructure the company.

It will have to boost its revenues with cost cuts that total £407m ($650m) spread over the next two years, the minister added.

The airline reported a loss of $875m in the fiscal year ending in March.

Wage cut concerns

Hundreds of Air India pilots went on strike in September to protest against management plans to cut pay incentives.

The strike was called off when Mr Patel said the grievances would be dealt with. Possible wage cuts, he said, were only one aspect of cost reduction.

Mr Patel said he met representatives of Air India staff unions to discuss cost-cutting avenues.

"The unions were very understanding and are aware of the problems," he said in a news conference.

Air India employees were willing to cooperate with management to "forge a way out of the current crisis", he said.

The airline has already showed signs of recovery, Mr Patel said, with air traffic showing an upward trend in the last month.

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