Air India expects to wipe out losses in six years

PTI New Delhi | Updated on March 12, 2018 Published on April 22, 2012


Ailing Air India, which would get equity infusion of Rs 30,000 crore till 2021 as part of its turnaround plan, expects to wipe off its losses and become cash positive in the next five-six years, official sources said on Sunday.

The airline, which would get an upfront equity infusion of Rs 6,750 crore this financial year, estimates that it would slash its current yearly operating loss of Rs 1,700 crore to just Rs 23 crore in five years and become cash positive by 2018, top Air India officials said.

The estimations are based on the assumption that the airline’s turnaround plan (TAP) and the financial restructuring plan (FRP), now approved by the government, would be implemented as planned.

Apart from deciding to infuse additional equity worth Rs 30,231 crore between 2012 and 2021, the government 10 days ago also approved hiving off its engineering and ground handling services into two wholly-owned subsidiaries that would reduce its employee-aircraft ratio to 100 from 224 now.

Air India has also been allowed to issue government- guaranteed non-convertible debentures (NCDs) worth Rs 7,400 crore to its lenders, like financial institutions, banks, LIC and EPFO. These NCDs would be used to repay part of the airline’s close to Rs 21,200 crore working capital loans.

The debt-ridden carrier has outstanding loans and dues worth Rs 67,520 crore, of which Rs 21,200 crore is working capital loan, Rs 22,000 crore long-term loan on fleet acquisition, Rs 4,600 crore vendor dues, besides an accumulated loss of Rs 20,320 crore.

The officials said Air India was now on a revival mode and “our fundamentals are strong“.

The airline posted a healthy 46 per cent revenue growth last month over March 2011. While its yields on domestic sector had a significant improvement of 38.5 per cent, its seat factor also rose nearly 7.9 per cent.

Published on April 22, 2012
This article is closed for comments.
Please Email the Editor