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Air India to fly into profit zone after 9 years

business Updated: Oct 22, 2015 23:10 IST
Tushar Srivastava
Tushar Srivastava
Hindustan Times
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The national air carrier, Air India, is aiming to post its first operating profit in 2015; nearly 9 years after its merger with the former Indian Airlines.(HT File Photo)

National carrier Air India (AI) is hoping to post its first operating profit in 2015-16 since the merger of AI and erstwhile Indian Airlines in 2007.

Officials said a combination of factors including falling oil prices, better financial management and the improved performance of the Boeing 787 could lead to better results.

AI, which has accumulated losses of over Rs 35,000 crore and a debt of over Rs 45,000 crore, is surviving on a `30,231 crore bailout funded by the taxpayer.

The government recently appointed turnaround specialist Ashwani Lohani as the new chairman and managing director (CMD) to lead AI out of the mess it is in.

“We are targeting an operational profit of Rs 6 crore. We are also targeting a pax revenue of Rs 17,000 crore in 2015-16 compared to Rs 15,500 crore achieved in 2014-15,” the official said.

“Our main focus over the next few months would be to fill the premium class seats. At present, the occupancy in business class is about 40% while in first class it’s just about 20%. We are aiming for 80% occupancy in both,” he said.

“Premium and not economy class is where an airline makes most of its money from. The focus on filling business class seats is the way to go for AI,” said aviation expert Rajji Rai.

AI, which will add five new planes to its fleet this year, plans to take 15 A320s on lease next year, HT reported on October 20 in order to improve its market share.

The airline board has also approved leasing of 14 A320 Neos, which would come between April 2017 and March 2018 and will be leased for a ten-year period. AI had a domestic market share of 16.6% in August. The market was led by IndiGo with a marketshare of 35.3%.

AI’s OTP, which was 76.1% in August shot up to 82.4% in September.