Air India hopes to bring down its net losses to less than `2,000 crore
in FY17, enabling the carrier to turn cash positive in FY17-18.
(Reuters)
Air India is expected to report an operating profit of Rs 8-10 crore
in FY 16, the first since the
erstwhile Indian Airlines was merged with
it in 2007, a senior executive confirmed to FE. Consequently, the
state-run carrier’s losses would be limited to around Rs 2,600-2,800
crore, significantly lower than in FY15 when they were Rs 5,574.47
crore.
“This is the first year since the merger that we will make a small
operating profit,” the executive observed, adding that the airline is
looking to add flights both on international and domestic routes. Air
India’s revenues for FY 16, however, are expected to remain flat since
yields on both domestic and international routes have fallen following
lower ticket prices. In FY15, Air India reported revenues of R19,781
crore and an operating loss of Rs 2,171.40 crore.
“We have seen a 9-10% drop in yields although there has been an
increase in the passenger load factor,” the executive said. He added
that the current year could see a rise in revenues of 10% since capacity
would increase.
The reduced losses are the result of the sharp drop in fuel prices,
which have fallen by close to 56% since March 2014. Moreover, the
full-service airline has also utilised its aircraft more efficiently.
While wide-bodied aircraft now fly 13 hours a day, the narrow-bodied
Airbus aircraft fly around 11 hours a day. Moreover, better planning is
allowing Air India to operate more flights on different routes without
adding to the fleet.
Air India hopes to bring down its net losses to less than `2,000
crore in FY17, enabling the carrier to turn cash positive in FY17-18.
That’s a good two years ahead of the timeline targeted in the turnaround
plan that was approved in April 2012.
The turnaround plan envisages an equity infusion by the government of
`30,231 crore of which `22,280 crore has been infused. The 2016-17
Budget saw Air India getting an allocation of `1,713 crore as part of
the plan against the airline’s demand of `4,300 crore.
According to the some senior executives, the airline expects to earn
`2.5 crore each from the sale and lease-back of nine Dreamliner aircraft
from American aircraft manufacturer Boeing. The deal is supposed to be
completed in the next few months. After the delivery of the Dreamliner
aircraft, Air India is expected to increase flights to places like
Singapore, Nairobi, Dar-e-Salaam, Madrid, Barcelona and Stockholm. Later
this year — July 4 or August 15 — Air India is expected to start its
first direct flight between New Delhi and Washington. The national
carrier will receive the delivery of 10 ATR 72 aircraft in the current
fiscal year, which will help the airline expand on domestic routes to
tier 3 and 4 cities like Bhavnagar, Nashik, Hubli and Jabalpur.