|MoS Jayant Sinha|
prepared a revival plan for Air India which focuses on building a competitive and profitable airline group.
Meanwhile, the national carrier's net loss declined 17.6 per cent year-on-year to Rs 5,337 crore during 2017-18 due to lesser allowance for exceptional items which includes balance payable to employees and duty credit entitlement under the Served From India scheme (SFIS).
A comprehensive financial package, including transfer of non-core debt and assets to a Special Purpose Vehicle, implementation of a robust organisational and governance reforms by the board and differentiated business strategies for each of the core businesses of Air India are part of the plan. "Higher levels of operational efficiency by strengthening management and implementing best business processes," are among the major elements of the plan, Sinha said.
He also said that Air India has planned to monetise its unutilised and surplus immovable real estate assets over the next few years.
"Till date, Air India has realised an amount of Rs 410 crore through sale of its non-core assets in various cities in India and abroad.
"Air India has also realised a rental income of Rs 314 crore approximately," he said during the Question Hour.
The minister also said that amount of revenue likely to be generated from monetisation of land and properties depends on the bid process and subject to no-objection certificates from authorities concerned.
Air India is estimated to have a debt worth over Rs 55,000 crore.
Air India provisioned Rs 112 crore in FY18 for under exceptional and extraordinary items compared to Rs 2,415 crore spent exactly a year ago. The airline also revised its net loss for FY17 from Rs 5,765 crore to Rs 6,281 crore, according to the data published in the Public Enterprises Survey 2017-18 released on Thursday.
The civil aviation ministry had estimated Air India’s losses at Rs 3,579 crore for FY18. The carrier’s provisional losses for FY17 were Rs 3,728 crore which turned to be 65% more than the estimate.
Air India’s operating revenue increased to Rs 23,003 crore, up 5.3% y-o-y on the back of measures like route rationalisation and better utilisation of aircraft. Its fuel expenses went up by 16% y-o-y to Rs 7,362 crore due to increase in international crude prices at the start of 2018. The earnings before interest, tax, depreciation, amortisation and rentals (Ebitdar) fell to Rs 906 crore during FY18 compared to Rs 1,750 crore a year ago. The Ebitdar margin was reported at 3.7% during FY18 vs 7.8% in FY17.
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After a failed attempt to privatise Air India earlier in the year, the government is working on a new model to change Maharaja’s fortunes. The government last month decided to transfer Rs 29,000 crore of Air India’s current debt of Rs 55,000 crore to the SPV. Under this scheme, all non-core assets like land, buildings, etc, would be transferred The funds raised through sale of these assets would be used to reduce the Rs 29,000-crore debt held in the SPV.
Meanwhile, Air India’s low-cost arm Air India Express reported a 10% y-o-y jump in net profit to Rs 260 crore during FY18 while regional connectivity subsidiary Airline Allied Services curtailed losses by 15% y-o-y to `244 core during FY18.
Govt has prepared revival plan: Sinha
The government has prepared a revival plan for Air India that provides for a comprehensive financial package, differentiated strategies for each of the airline’s core businesses and robust organisational reforms, Union minister Jayant Sinha said on Thursday.
Various initiatives to turn around the national carrier, which is staying afloat on a bailout package extended by the previous government, including monetisation of real estate assets are progressing.