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Air India Group Could Reportedly Post Consolidated Annual Profit

SimpleFlying 1/30/2023 Gaurav Joshi
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The Air India Group, which includes its low-cost subsidiary Air India Express, could end this financial year with a consolidated profit. The airline recently completed one year under the Tata Group and has already witnessed several positive changes, including a significant increase in revenue and fleet optimization. Its transformation requires massive cash infusion, but the new owners expect good results in the coming years.

Record revenues

Air India and Air India Express together could post consolidated profit in the financial year ending in March 2023. A report by The Economic Times (ET) quotes people aware of the matter who say that the airline’s transformation under the Tatas is already visible in the company’s finances.

The airline group is likely to be profitable before interest, tax, depreciation, and amortization, although Air India alone will still be a loss-making enterprise, losing around ₹24 billion (almost $300 million). However, this is still far lower than the ₹70 billion ($856 million) loss it reported in the financial year 2022.

Air India’s revenue has seen a massive boost under the Tatas, with December recording around ₹31 billion ($379 million). The airline’s yield has also become much better to ₹6.5 from ₹4.5 in 2020. A person in the know told ET,

“Revenue performance for the airline has improved significantly. While before privatization Air India was earning Rs 70 crore per day, it earns Rs 100 (crore) per day now even with a lower capacity.”

Work in progress

One of the reasons Air India will post a standalone loss (although a lot less than before) is the amount of money being pumped in to get its fleet in order. Having several narrowbody and widebody planes refitted with engines and other spares and making them airworthy has been quite expensive.

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The Tatas have also committed $400 million to refurbish its plane interiors. Air India has been criticized for its shoddy cabins for years, with passengers often posting pictures on social media showing broken seats and dirty upholstery. Changing all of that will require both time and money and something that will affect the carrier’s bottom line figures. ET quotes a person as saying,

“As new aircraft start coming in along with improvement in product and the older ones are retired, the unit cost will also improve significantly, which will take the airline close to net profitability.”

Long-term plan

The Tata Group is in the game for the long term. Nobody expected Air India’s problems to disappear within a year. Still, plenty of improvement has taken place in the last 12 months.

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Its management also wants to fix the basics and has given the airline a timeline of around five years to resolve most of its problems. Air India has recruited talented individuals across various departments and positions to run its operations and is aware of further improvements required for issues like customer service and on-time performance. Perhaps the next financial year would see even better results.

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Source: The Economic Times

  • Air India
    Airline Type: Full Service Carrier
    Hub(s): Delhi Indira Gandhi International Airport
    Year Founded: 1946
    Alliance: Star Alliance
    CEO: Campbell Wilson
    Country: India
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