Saturday, October 03, 2015

Air India may be back to profits much sooner with new CMD's two pronged strategy

New Delhi: The new boss at Air India wants to cut three years from the target set for the national carrier to turn profitable.

Chairman and managing director Ashwani Lohani has asked SBI Capital Markets to come up with suggestions to fly the airline back to black by 2018-19. A turnaround plan prepared by the investment bank in 2012 had projected it to post a net profit by 2021-22. A steep drop in oil prices —jet fuel accounts for more than athird of cost for airlines - and an improving travel space offer the industry a more favourbale environment now, giving the airline a chance to turn around faster.

"I have asked SBI Caps to advance the net profit target," Lohani told ET. He didn't elaborate. Asenior Air India official said it asked SBI Caps to suggest the load factor and yields it needed to achieve to become profitable early. "This is the time for the airline to try and maximise its revenue and the CMD believes that it can be achieved much earlier," said another, citing the business environment. Both spoke on the condition of anonymity.
03/10/15 Mihir Mishra/Economic Times
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