Thursday, June 13, 2019

‘Air India may break even for first time in over a decade in FY20’

National carrier Air India, which is expected to post its highest ever annual loss in the recently concluded financial year 2018-19 (FY19), could break even at a net level for the first time in over a decade in the current financial year (FY20).

Aviation advisory firm CAPA in a recent report said that the favourable market conditions represent a unique opportunity for a structural reset of the national carrier, which Air India must take advantage of. While the domestic market will remain highly competitive, the international sector has the potential to be very positive, it said. With the suspension of Jet Airways’ operations, the state-run airline has emerged as the largest carrier on overseas routes — where capacity is constrained — and international operations could prove to be lucrative for the struggling company. The airline’s financials have also shown signs of improvement following Jet’s collapse.

“Air India could break-even at a nett level for the first time in over a decade, delivering a positive foundation for privatisation. However, issues related to treatment of debt and labour flexibility will still need to be addressed if serious bidders are to be attracted,” CAPA said.

However, according to an IANS report, the Maharaja could report highest-ever loss of over Rs 7,600 crore in financial year 2018-19 on account of low fleet utilization and high fuel prices, among other reasons. This could make the divestment process, which is expected to begin early next month, a tedious chore.

The government had last year attempted to divest its 76 per cent equity stake in Air India to private parties, but the plan proved to be a damp squib with not a single investor turning up to submit an Expression of Interest (EoI). The government had then put the plan to sell its stake in the carrier on hold till the general elections were completed, after severe backlash from the airline’s staff who feared job losses.
13/06/19 New Indian Express

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