Air India flight may get less bumpy

State-owned carrier Air India’s operating losses may climb slightly in 2014-15, and it is likely to see a steep decline in its earnings, sources said.

The airline has been struggling to turn profitable for years and has posted continuous operating losses.

However, the losses have been reducing, from Rs 5,140 crore (Rs 51.4 billion) in 2011-12 to Rs 3,807 crore (Rs 38.07 billion) in 2012-13 and Rs 2,123 crore (Rs 21.23 billion) in 2013-14.

If Air India posts an operating loss of Rs 2,171 crore (Rs 21.71 billion) in 2014-15, it will fall far short of a target of restricting losses to Rs 1,200 crore (Rs 12 billion).

“Air India is slowly moving on the path of recovery. It may register an operating profit of Rs 6 crore (Rs 60 million) in 2015-16 due to an improvement in efficiency and reduction in fuel prices,” said an aviation ministry official who did not wish to be named.

Route rationalisation and cost-cutting measures appear to have failed as the airline’s Ebitda (earnings before interest, taxes, depreciation, and amortisation) is set to miss the target of Rs 1,150 crore (Rs 11.5 billion) in 2014-15 and will likely be Rs 541 crore (Rs 5.41 billion).

This will be far below the previous year’s Ebitda of Rs 771 crore (Rs 7.71 billion).

Passenger revenue is expected to increase by around eight per cent to Rs 15,450 crore (Rs 154.5 billion) in 2014-15 from Rs 14,300 crore (Rs 143 billion) in 2013-14.

Passenger revenue rose by 14.45 per cent in 2013-14.

An Air India spokesperson confirmed these numbers.

The government granted the carrier a performance-linked equity bailout of over Rs 30,000 crore (Rs 300 billion) in April 2012.

Of this, Rs 18,400 crore (Rs 184 billion) has been pumped in and the rest will be infused by 2020-21.

The government, however, has been trimming budgetary support to the airline and pushing it to break even.

Finance Minister Arun Jaitley had in the Budget made a provision of Rs 2,500 crore (Rs 25 billion) for Air India as additional equity infusion in 2015-16.

The airline wanted Rs 4,277 crore (Rs 42.77 billion) and has recently written to the minister to make a provision of the remaining Rs 1,777 crore (Rs 17.77 billion).

“If we do not get funds, the airline may have to raise money from the market, which will have a higher cost,” said an aviation ministry official.

“The airline has been able to meet almost all parameters of the turnaround plan.

“Efforts are being made to increase the on-time performance,” the official added.

The aviation ministry is monitoring Air India’s performance by the week after Prime Minister Narendra Modi sought a road map for revival of the airline two months ago.

He had written to Air India inquiring why the national airline was not able to post profits and whether the carrier needed government assistance to break even.