Now that it is no longer being dressed up for a potential suitor, Air India (AI) has no option but return to grunt work for survival.
So what happens now? Remember, the ostensible reason the government gave for looking to shed a majority stake in AI was its reluctance to pump in more taxpayers’ funds under a previously approved turnaround plan.
But now that the sale is off, not only is the government getting a rude reminder of its commitment to continue pumping money into the loss-laden airline, it has no choice but to begin nudging AI to bring in far more cost efficiencies to survive. It is an exercise at which AI has not been particularly successful.
The finances too offer no hope. Actually, the numbers have severely worsened.
A senior airline official told CNBC-TV18 that the net loss for 2017-18 is expected to be about Rs 3,900 crore, which is “an improvement over the previous fiscal” but added that these were unaudited numbers. He said the topline would be close to Rs 24,000 crore.
It's better to take the AI numbers with a pinch of salt, especially after the carrier reported unaudited net loss of Rs 3,643 crore in 2016-17 with the audited losses much higher at Rs 5,675.16 crore.
Even if we take the unaudited net loss number, the airline lost over Rs 10 crore on an average each day of 2017-18 despite benign fuel prices in the last fiscal.
AI's fuel bill rose 19 percent to Rs 7,500 crore in 2017-18 and is expected to breach Rs 10,000 crore in the current fiscal due to rising global prices, said the official, who did not wish to be identified.
27/06/18 Sindhu Bhattacharya/CNBC TV18
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So what happens now? Remember, the ostensible reason the government gave for looking to shed a majority stake in AI was its reluctance to pump in more taxpayers’ funds under a previously approved turnaround plan.
But now that the sale is off, not only is the government getting a rude reminder of its commitment to continue pumping money into the loss-laden airline, it has no choice but to begin nudging AI to bring in far more cost efficiencies to survive. It is an exercise at which AI has not been particularly successful.
The finances too offer no hope. Actually, the numbers have severely worsened.
A senior airline official told CNBC-TV18 that the net loss for 2017-18 is expected to be about Rs 3,900 crore, which is “an improvement over the previous fiscal” but added that these were unaudited numbers. He said the topline would be close to Rs 24,000 crore.
It's better to take the AI numbers with a pinch of salt, especially after the carrier reported unaudited net loss of Rs 3,643 crore in 2016-17 with the audited losses much higher at Rs 5,675.16 crore.
Even if we take the unaudited net loss number, the airline lost over Rs 10 crore on an average each day of 2017-18 despite benign fuel prices in the last fiscal.
AI's fuel bill rose 19 percent to Rs 7,500 crore in 2017-18 and is expected to breach Rs 10,000 crore in the current fiscal due to rising global prices, said the official, who did not wish to be identified.
27/06/18 Sindhu Bhattacharya/CNBC TV18
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