AI likely to post over Rs 100 cr operating profit in 2015-16

As Prime Minister Narendra Modi spoke of Air India's turnaround in his Independence Day speech today, the state-run airline is expecting to log over Rs 100 crore operating profit in the last fiscal and projecting to cross the Rs 700 crore mark in the current financial year.

While the 2015-16 figures are still being audited and finalised, senior officials said, "We are sure to cross Rs 100 crore worth of operating profits in the last fiscal, largely due to low fuel prices as well as improved performance. In the current financial year, we are projecting that this figure will jump to Rs 700-800 crore."
 

In his Independence Day address from the ramparts of Red Fort, the Prime Minister, while speaking on the turnaround of major PSUs, said, "Today I can say with complete satisfaction that Air India, which used to be notoriously known for incurring losses, has improved its operations leading it to log operational profits."

The officials, however, said the biggest challenge before the airline was the massive debt burden of Rs 52,000 crore, whose servicing alone is costing the airline around Rs 5,800 per annum.

After debt servicing, the cash gap between operating and net profit was estimated around Rs 4,000 crore. The carrier had incurred a loss of Rs 5,859.91 crore in 2014-15.

Asked how they planned to bridge this gap, they said, "A proposal could be to convert the debt into equity. It is for the government to take a final call, but we have flagged it."

Maintaining that the airline was consolidating and expanding, the officials exuded confidence that Air India would become "very good operationally in the coming months by trying to adopt a more aggressive strategy in the market".

This would be achieved through rapid expansion in its international and domestic network, along with a fleet expansion plan over the next 3-4 years, they said.

When contacted, Air India CMD Ashwani Lohani said, "We are on the road to recovery. But there is still a long way to go due to the debt burden and other legacy issues."

"We want to jump to Rs 700-800 crore worth of operating profits in the current fiscal. But this being a commercial enterprise and given the state of the aviation industry worldwide, this is what we desire. Everyone is putting in their best," Lohani told PTI here.