 "Ashwani Lohani")
Air India aims to "substantially increase" its operating profit in FY17 on the back of an increase in revenue and better fleet utilisation.
The national carrier made an operating profit of Rs 105 crore in fiscal 2016 its first after the merger in 2007. In FY15 the airline had made an operating loss of Rs 2,636 crore.
Air India chairperson Ashwani Lohani, said: "We are hoping for an increase in revenue despite the pressure on yields. In September our revenue was 5 per cent higher on a year on year basis and we are expecting in an increase in October too. We expect a substantial increase in operating profit over the last year."
Under Lohani, there has been a greater push towards sales, marketing, promotions and brand building. Lohani expects these initiatives will lead to increase in revenue after a near flat growth last fiscal.
Lower fuel prices will be critical too. The FY16 operating profit was aided by a reduction in aviation turbine fuel price and the airline's fuel bill reduced by around Rs 2,400 crore on a year on year basis. Lohani, however, said that the airline would have not been able to achieve operating profit with lower fuel costs alone.
"We have improved aircraft utilisation and increased load factors. The capacity deployed increased without addition of new aircraft. We launched new flights between Delhi - San Francisco, Delhi -Vienna and Ahmedabad-Newark. Now we are doubling the frequency on San Francisco sector to six flights per week and launching a new Delhi-Madrid service," Lohani added.
The challenge before Air India management however will be reduction in its debt. High interest and maintenance expenses have resulted in the airline posting a net loss of Rs 3,837 crore.
| AIR INDIA’S FY16 PERFORMANCE CARD |
|
The airline's annual interest outgo is around Rs 4,000 crore and Lohani says that reducing the interest burden is critical to airline's turnaround. " We are looking at ways to reduce the debt. Discussions are on with banks," he says without elaborating.
According to a PTI report Air India is looking to rejig debt worth Rs 10,000 crore under the scheme for sustainable restructuring of bad assets floated by the Reserve Bank of India (RBI).
SBI Capital Markets would be roped in to work on the proposal and the whole process of debt restructuring is expected to take at least six months.The airline is surviving on a Rs 30,000-crore bailout package from the government that is spread over 10 years.
About Rs 22,000 crore has been provided to Air India under the turnaround plan which includes financial support towards repayment of principal as well as interest on government- guaranteed loans taken for aircraft acquisition.
