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Air India to show operating profits in FY13: Economic Survey

PTI     February 27, 2013
Air India is expected to log in operating profits this fiscal and its performance in the first six months has been in line with the target set in the turnaround plan approved by the government in April, 2012.

According to the Economic Survey 2012-13, the national carrier has registered all-round enhanced performance such as on-time performance at 85 per cent, passenger load factor at 70.9 per cent and yield at Rs 4.31 per revenue passenger kilometre during the April-October period.

"It is expected that the company will achieve positive EBIDTA (earnings before income, taxes, depreciation and Amortisation) in the results for the Financial Year 2012-13," the Survey said.

"For the first half of the year, performance has been in line with the target set in the turnaround plan," it added.

In April, the government had approved a turnaround plan and a financial restructuring plan for improving the operational and financial performance of Air India .

This included Rs 30,000 crore equity infusion over a nine -year period and induction of 27 Boeing 787 Dreamliners.

Besides, hiving off Air India's MRO (Maintenance, Repair and Overhaul) business and its Engineering Services as two wholly-owned subsidiaries was also approved.

The airline was also 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 were to be used to repay part of the airline's close to Rs 21,200 crore working capital loans.

The Survey noted that the national carrier has taken several measures towards cost cutting and revenue enhancement during the year as per its turnaround plan.

This includes route rationalisation, phasing out and grounding of old fleet, freezing of employment in non- operational areas, leveraging assets of the company to increase MRO (maintenance, repair, and overhaul) revenue and revenue from the company's real estate properties, it said.

That apart, an oversight committee in the Civil Aviation Ministry has been constituted to closely monitor the performance of Air India vis-a-vis milestones set in the turnaround plan.

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