Photo Credit: Shah Junaid/VCCircle

Air India posts first operating profit since merger with Indian Airlines

By PTI
17 October, 2016

For the first time in a decade, Air India has reported an operating profit of Rs 105 crore in 2015-16, aided by lower fuel costs and higher passenger numbers, even as the national carrier incurred a net loss after interest of Rs 3,837 crore in the same period.

The airline, which is working to improve its financials, had an operating loss of Rs 2,636 crore in 2014-15.

During its meeting on Friday, the Air India board approved the financial numbers for 2015-16 and the carrier has reported an operating profit of Rs 105 crore, sources said.

This is the first time since 2007 — when the erstwhile Indian Airlines was merged with Air India — that the national carrier has made an operating profit.

Having an operating profit in a decade is an encouraging sign for the airline, which is seeking to turn around its fortunes amid stiff competition, sources said.

A decline of nearly 31% in fuel costs in the last financial year compared to the year-ago period was a key factor in the airline becoming operationally profitable.

The sources said the airline’s net loss after interest declined to Rs 3,837 crore in the last fiscal, from Rs 5,859 crore in 2014-15.

According to the sources, the benefits of lower fuel costs were passed on to passengers, which are also reflected in terms of lower yield during the last fiscal. Yield — an indicator of ticket prices — declined by 7.7%.

The average ticket price last fiscal stood at Rs 8,700.

In 2015-16, Air India carried 18 million passengers, an increase of 6.6% compared to 16.88 million in 2014-15.

However, in 2015-16, the carrier saw its revenue slide to Rs 20,526 crore, from Rs 20,613 crore in 2014-15.

Non-operating expenses like interest cost and others constituted 18.4% of the total cost while fuel cost accounted for 24%, sources said.

Indicating improved operating performance, EBITDAR (earnings before interest, tax, depreciation, amortisation and rentals) rose to Rs 3,587 crore last financial year, from Rs 1,436 crore in 2014-15.

Last fiscal, the airline’s capacity deployment and aircraft utilisation went up by 4.8% and 7.5%, respectively. It had forex loss of Rs 352 crore in 2015-16.

Air India is staying afloat on a Rs 30,000-crore bailout extended by the government.

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Air India posts first operating profit since merger with Indian Airlines

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