New Delhi: Casting doubts on Air India’s turnaround plan, Deloitte Touche Tohmatsu India said that the airline has overplayed its revenue, yield and market share growth projections while understating a likely increase in fuel and staff expenses. The consultancy criticised Air India’s assumption that fuel costs, which account for nearly 40% of an airline’s operating expenses, will not rise.
In December 2010, Deloitte was appointed to review the turnaround plan drafted by SBI Caps and Air India.
The underlying theme of the Deloitte report is that the turnaround plan is not feasible and is riddled with wrong assumptions leading to ambitious projections and realisations. In short, it is not realistic and workable. Deloitte has also questioned Air India’s fleet acquisition plan, indicating that such a strategy could actually lower yields and have adverse financial implications.
10/05/11 Sunny Verma/Financial Express
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