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Air India soars on topline

The provisional financials for Air India are now available. India?s national carrier has done exceedingly well in terms of topline, registering aggressive growth.

india Updated: May 13, 2006 01:36 IST

The provisional financials for Air India are now available. India’s national carrier has done exceedingly well in terms of topline, registering aggressive growth.

Air India closed the last financial year with Rs 8,984 crore revenues, including Rs 452 crore accruing from Air India Express operations. CMD V. Thulasidas, who will remain helmsman now till December despite having been empanelled as a full Secretary zto Government of India, told HT, “This is a significant jump over the last financial year when we managed revenues of Rs 7,676 crore. Of course, there was no Air India Express then. As far as profitability is concerned, I am pleased to report that for the fifth successive year we will make a net profit, albeit double digit only.” Perhaps, more importantly, Air India has once again got IATA’s IOSA status. When it was not extended some time ago, there was a huge hue and cry.

A high-profile quality management and safety audit (IATA Operational Safety Audit) is a must for any global carrier. Thulasidas is pleased as punch that this has come through, because the airline strived for the renewal audit.

Now that the decks are being cleared for the merger of the two national carriers, Thulasidas is of the opinion that the IPO of the combined entity would be one of the biggest in recent times. He said, “The government has to take a call on the timing and once the consultants give us a valuation of the combined entity, then the process will kickstart.” He added that it would be a domestic listing.

On issues cropping up over a merger in the two airlines, Thulasidas categorically asserted that unlike the Air France-KLM merger where two separate nations and two separate owners were involved, these were two PSUs. “Yes, there are operational issues, but these aren't serious and not insurmountable. Government of India is the owner of both the airline, it wants a merger and only the formalities have to be completed,” he added.

The aviation business has been hit by rising fuel costs globally and India is no exception. Thulasidas said that Air India had to spend a tad over Rs 900 crore last year on fuel due to the crude spike.

“With as much as two-thirds of our fuel being uplifted internationally, the burden is proving to be a drag on our bottomline. As such, we have started fuel hedging, but this is not more than 10 per cent per quarter. Last year ballpark our fuel expenditure was as much as Rs 3,000 crore. No airline in the world can withstand a continuing oil spike, but it is getting tough,” he said.

Air India expects good growth in this financial year as well, even as pressure on its margins remains. With the induction of as many as 12 new aircraft over the next 12 months. Thulasidas said, “Between November- March, as many as six new Boeing 737-800s will join the fleet. All of them will be deployed by Air India Express. Then over February, March and April, 2007, three 777-200 LR will join the Air India fleet. Finally by July, 2007, another three 777-300 ER will join the fleet. We are planning major expansion for Air India Express using the new aircraft out of Chennai to KL and Singapore, out of Kolkata to Bangkok and Singapore, Trichy to Dubai and Amritsar and Mangalore to Dubai.”

First Published: May 13, 2006 01:36 IST