Air India sets annual targets to increase revenue, reduce costs

Air India Ltd has set itself annual targets to increase revenue by Rs.5,000 crore and save Rs.4,000 crore in costs through a series of steps entailed in its modified turnaround and financial restructuring plan, the airline said in a statement.
The plan will include more equity infusion by the government, conversion of short-term loans to long-term ones, reduction of interest rates, resolving merger issues, and spinning off its ground-handling and aircraft maintenance businesses, Arvind Jadhav, chairman and managing director of the state-run airline, said in a meeting with bankers on Friday.
The cash-strapped airline expects to turn profitable by 2014 with help from a third financial restructuring plan in as many years. The plan was prepared by SBI Capital Markets Ltd and vetted by consulting firm Deloitte Consulting India Pvt. Ltd.
Air India has accumulated Rs.13,300 crore in losses since its merger with Indian Airlines in 2007. Before the merger, Air India had losses of Rs.447.93 crore and Indian Airlines Rs.240.93 crore, aviation minister Vayalar Ravi had told Parliament on 10 March. The airline has a debt of Rs.40,000 crore.
“Jadhav met at least 20 bank executives to discuss reworking interest rates for Air India’s loans,” said a senior Air India executive requesting anonymity. “Jadhav will seek approval from the Reserve Bank of India once Air India formalizes the restructuring of loans.”
The banks will form a joint committee to rework Air India’s loan strategy, he said.
09/04/11 P.R. Sanjai/Live Mint

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Categories: Air India Apr 2011