Millennium Post

As private cos dive into red, AI to fly to profit zone next fiscal

After a streak of losses, Air India had reported a net profit of Rs 14.6 crore in December last year, from a loss of Rs 168.7 crore in the corresponding period of 2013.

As per Turnaround Plan (TAP) projections, the national carrier is to be fully operationally profitable by financial year 2016-17.

In April 2012, the government had announced a bail-out package of Rs 30,000 crore, spread over a period nine years, while approving its turnaround plan as well as financial restructure plan with certain riders.

“Going by Budget estimates for the next fiscal, Air India is expected to be operationally profitable in FY 2015-16 itself, much ahead of the TAP projections,” airline sources said here today.

The return to profitability and on-time performance will be the key drivers of the airline’s operations next fiscal, they added. It may be noted that off late Air India’s on-time performance has been quite poor, leading to the Civil Aviation Ministry directing the airline management to deduct a part of the salary of those staff responsible for delay of a flight.

As per the airline’s budget estimates, Air India expects a seat occupancy of 77.7 per cent on domestic routes and 73 per cent on international flights.

The airline also expects that the passengers revenue will touch Rs 17,000 crore mark and the over all revenue would stand around Rs 21,500 crore in 2015-16.

This increase in revenue will be helped by an expected 6.5 per cent growth in passenger number, which it pegged at 18 million for FY 2015-16, from the estimated 16.9 million for the fiscal 2014-15, an increase of 1.10 million passengers in absolute numbers.

During the FY 2015-16, Air India plans to induct seven aircraft in the fleet, with four of them Airbus A320s and three Boeing 787-Dreamliners.

“Earnings before Interest, Tax, Depreciation (EBITD) is also likely to go up significantly to 10 per cent of the revenue,” they said.

The airline’s Budget estimates area based on the premise that the crude prices would remain between $60 and $65, and dollar to rupee exchange rate at 62.

With Air India joining the Star Alliance, it expects that a much higher number of its passengers would burn miles in exchange for premium seats especially from the US, Europe, the UK and Australia, they said.
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