Maharaja Magic: Air India eyes operational profit for the first time in ten years!

New Delhi: Air India is eyeing operational profits for the first time in a decade this fiscal, two years ahead of the target as per its turnaround plan. Lower fuel prices coupled with improved operational performance are being cited as the two main reasons for this happy state of affairs and airline officials say net profit could similarly be advanced by two years. Aircraft availability, increased cabin manpower and more aggressive marketing are some other reasons the airline’s financials are improving. An Air India official said this month, 58 narrow body aircraft have been made available against the 52 that were available in previous months. This alone has helped Air India corner more passengers.[caption id=“attachment_2454582” align=“alignleft” width=“385”] Air India flying high. PTI[/caption] Another official said Air India’s profit before tax target could be preponed to 2018-19 from 2021-22 but it presupposes the airline’s load factor (number of occupied seats) at 80 percent networkwide. This official said as per the turnaround plan, Air India was to achieve yield of Rs 3.75 crore networkwide by this fiscal but has already managed Rs 4.05 crore so this target will also be revised upwards. Civil aviation secretary RN Choubey said today Air India is on course to achieve Rs 6 crore as operational profit this fiscal but did not provide more financial details. He said the Draft Civil Aviation Policy is silent on the fate of the national carrier since it is already on course to beat targets set in the turnaound plan. He was responding to a question on whether there were any plans to privatise Air India and why these were not mentioned in the Draft Policy. But privatisation of Air India, now that it seems to have begun a financial turnaround, is not totally ruled out. Speaking to CNBC-TV18 on Sunday, Civil Aviation Minister A Gajapathi Raju had said, “If you can get private parties to come forward, why not? I think there is a lot of hope for Air India. The problem with Air India is indiscipline. Whenever they have worked with discipline, they have done well. I don’t know why Air India bashing keeps happening. I am not ruling out privatisation, can’t rule out anything. We can simultaneously go about looking for this……if someone comes forward we are willing to look at it.” A push for getting a white elephant like Air India privatised is being made for some time now. Earlier this year, the independent directors on the board of the airline had met Raju to convince him about the need to privatise Air India. In March this year, the heavy industries ministry had created a flutter by classifying Air India as “sick”, reviving a discussion on whether the government should get Air India off its hands as its financial situation is not improving despite continuous equity support. Air India’s accumulated losses stood at Rs 5,388 crore, Rs 5490 crore and Rs 7,559 crore in 2013-14, 2012-13 and 2011-12, respectively. At that time, airline officials had said that there has been some talk of initiating the process of privatisation by starting with two businesses which were earlier spun off from the airline - engineering and ground handling. They had said then that Air India Express could also be considered under this scheme. A proposal to recommend privatisation of Air India has been discussed informally at several board meetings of the airline — a subject usually taken by its independent directors — but no formal resolution has been drafted in this regard. Independent directors on the board of Air India are: former Procter & Gamble India chief and writer Gurcharan Das; IIM Ahmedabad professor Ravindra H Dholakia, retired Air Marshal KK Nohwar (former vice-chief of the Indian Air Force); banker Renuka Ramnath and former director of IIT Roorkee, Prem Vrat. At least two of these directors are known to be strong votaries of privatisation. Now that the airline is expected to post operational profit for the first full year in a decade, time is ripe for at least a discussion over privatisation. As of now, Air India continues to be saddled with a debt of over Rs 40,000 crore that includes a long-term loans taken for aircraft purchase and working capital loans. Its accumulated losses are to the tune of Rs 30,000 crore and the airline reported losses of Rs 5,389 crore and Rs 5,490 crore respectively in 2013-14 and 2012-13. Air India is surviving on a Rs 30,000-crore bailout package extended by the previous UPA government in 2012.