Flag carrier Air-India is planning to hive off its over Rs 500 crore (Rs 5 billion) cargo business into a separate company. On the cards also are plans to spin-off its information technology division into a separate subsidiary.

The move comes hot on the heels of the airline hiving off its engineering and ground handling businesses into two separate companies -- Air-India Engineering Services Ltd and Air-India Air Transport Services Ltd, respectively. In both the cases, it intends to dilute 49 per cent equity to a strategic partner.

V Thulasidas, chairman and managing director, Air-India, said, "We have identified that we need to have a stronger presence in cargo business.

"We are examining the possibility of creating a separate subsidiary for cargo operations. The joint venture route is being explored. At the same time, we are also examining what should be Air-India's IT philosophy."

The idea behind forming separate subsidiaries for businesses such as cargo, engineering, ground handling and information technology is to convert these businesses into separate profit centers.

"This will not only enable us to sharpen focus on our core business of operating flight services but also create dedicated units catering to these operations," Thulasidas pointed out.

While the development is viewed as a strategy to increase productivity and cut costs, the industry experts found in it an initiative towards part-privatisation of the national carrier.

Air-India's cargo business is one of the biggest among the scheduled international airlines. In the US and the UK, it operates with a capacity in excess of 120 tonnes per week operating over 20 flights weekly and has a wide trucking network ex-New York, Newark and Chicago.