Air India Group is reportedly set to release its consolidated annual profit
Tata Group is working hard to transform Air India in every possible way.
Air India Group, which includes its low-cost subsidiary Air India Express, may end this financial year with a consolidated profit. The airline recently completed one year under the leadership of the Tata Group and has already witnessed several positive changes, including significant revenue growth and fleet optimization. Its transformation requires a large cash injection, but the new owners expect good results in the coming years.
Air India and Air India Express together may post a consolidated profit for the fiscal year ending March 2023. A report by The Economic Times (ET) quoted people with knowledge of the matter as saying that the transformation of the Tatas-led airline is already visible in the company’s finances.
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The airline group is likely to be profitable before interest, taxes, depreciation and amortization, although Air India alone will remain a loss-making enterprise, losing about 24 billion Indian rupees (nearly $300 million). However, this is still significantly lower than the INR 70 billion ($856 million) loss reported in fiscal 2022.
Air India’s profits have increased significantly under the Tatas’ management, reaching about 31 billion Indian rupees ($379 million) in December. The airline’s profitability also improved significantly to INR 6.5 crore from INR 4.5 crore in 2020. An insider told ET,
“The airline’s revenue has improved significantly. While Air India was earning Rs 70 crore per day before privatisation, now it is earning Rs 100 (crore) per day even with less capacity.”
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One of the reasons why Air India will incur losses on its own (albeit much less than before) is the amount of money it is investing to clean up its fleet. Several narrow-body and wide-body aircraft were converted engines and other spare parts, and it was quite expensive to make them flyable.
The Tatas also spent $400 million on refurbishing aircraft cabins. Air India has been criticized for its poor cabins over the years passengers frequently posting photos on social media showing broken seats and dirty upholstery. Changing all this will require time and money, and that will affect the profitability of the carrier. ET quotes the man as saying:
“As new aircraft begin to arrive along with product improvements and older ones retire, the unit cost will also increase significantly, driving the airline into net profitability.”
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Long term plan
Tata Group is in for the long haul. No one expected Air India’s problems to disappear within a year. However, there has been a significant improvement over the past 12 months.
Its management also wants to fix the basics and has given the airline about five years to fix most of the problems. Air India has recruited talented people from various departments and positions to run its operations and is aware of the further improvements required in matters such as customer service and on-time delivery. Perhaps the next financial year will produce even better results.
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Source: The Economic Times
- IATA/ICAO Code:
- Airline type:
- Full-service carrier
- Indira Gandhi International Airport in Delhi
- Year of foundation:
- 1946 year
- Star Alliance
- General Director:
- Campbell Wilson
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