New Delhi optimistic on Air India narrowing losses
New Delhi projects that state carrier Air India is expected to make a net loss of Rs35.8 billion ($536 million) for the fiscal year ending 31 March 2018.
The figure is smaller than the provisional Rs36.4 billion in the previous fiscal year, stated India's minister of civil aviation Ashok Gajapathi Raju in a written parliamentary reply.
In the past four financial years, Air India has made a combined net loss of Rs1.69 trillion, reveals New Delhi.
Meanwhile, Air India is expected to double its operating profit year-on-year to Rs5.3 billion for the fiscal year ending 31 March 2018.
Raju explains that the improved figures are a result of New Delhi's turnaround plan for the Star Alliance carrier, which includes rationalisation of loss-making routes; enhanced utilisation of newer aircraft with higher ASKs; freezing of employment in non-operational areas; and re-contracting of loans that have resulted in savings of interests costs.
In addition, Raju cited national think-tank NITI Aayog's recommendation that New Delhi cut financial support to Air India.
"NITI Aayog in its report on Air India has stated that further financial support in a mature and competitive aviation market would not be the best use of scarce financial resources of the government."
In fiscal 2015, the airline reported an operating profit of Rs1.05 billion - its first in a decade. Despite the turn to profit, the carrier is still dependent on a financial assistance package from the government that is expected to run until 2021-22. In the present financial year alone, it is budgeted to receive Rs23 billion in government aid.
Air India, which has a growing debt of more than Rs5 trillion, is undergoing a strategic divestment process as New Delhi looks to revive the carrier.
The five subsidiaries expected to be involved in the privatisation include ground handler Air India Air Transport Services, budget unit Air India Express, Air India Engineering, Air India Regional/Alliance Air and hotels unit Hotel Corporation of India.
