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Air India set to make operational profit for the first time in 10 years

By Vinay Kumar

Hyderabad. For the first time in the last 10 years, Air India, the country’s flag carrier which has been facing turbulent times financially, is all set to post an operational profit in 2015-2016.

Both Civil Aviation Minister Ashok Gajapathi Raju and Secretary RN Choubey, in their interaction with the media during the just-concluded India Aviation 2016 exhibition and conference, appeared satisfied for the time being over the performance of the debt-ridden public sector carrier.

According to Civil Aviation Secretary, the national carrier is likely to post an operating profit of about Rs six crore, two years ahead of the target year which was set for it in accordance with the turnaround plan. The government had extended an assistance of Rs 30,000 crore as part of a package for Air India’s turnaround plan.

Low oil prices, tight norms for operations, maximum usage of aircraft, on-time performance and fiscal discipline are some of the factors said to have contributed to this situation.

Air India has a debt of about Rs 40,000 crore for the purchase of aircraft and working capital. Its accumulated losses are about Rs 30,000 crore. The carrier had made a loss of Rs 5,859 crore as on March 31 last year.

The national carrier is expected to take deliveries of another nine wide-body planes by March 2018 which include six Dreamliners and three B777-300ERs. It will also induct another around 30 single-aisle A-320s, including A-320neos, during the same period.

Global aircraft manufacturers Boeing and Airbus have estimated that Indian airlines together are likely to order 1,740 and 1,600 planes respectively over the next 20 years. Of this, while Airbus forecast India will require 380 wide-body planes, Boeing has pegged the requirement at 280. Boeing’s senior vice president for Asia-Pacific and India sales Dinesh Keskar had during the India Aviation show here March 17 said that Indian aviation was frequency-driven and there was a market for 250-300 seater planes like the Dreamliners and B-777s.

As part of its fleet expansion plan, the national carrier had in 2006 placed orders with Boeing for 68 aircraft — 27 Dreamliners, 15 B777-300ERs, eight B777-200LRs and 18 B-737- 800s. The airline has so far taken delivery of 21 Dreamliners, twelve 777-300ERs and all eight B777-200LRs and 18 B-737-800s. Before the merger, Indian Airlines had ordered 43 Airbus A-320 family aircraft.

However, the delivery of three B777-300ERs was postponed in the wake of the downturn in the global aviation sector in 2008. Last year Air India had decided to take the deferred delivery of these three planes, which are now expected to join the fleet between January-March next year.