Air India is on road to turning the corner and begin showing profitability ahead of what was originally envisaged by the government. Ashok Gajapatghi Raju, the minister of civil aviation announced this at a press conference at the India Aviation 2016 event in Hyderabad on Wednesday.
Responding to a question from Business Today on factors that will be making this possible, R N Choubey, secretary, ministry of civil aviation explained: "The reason why it will turnaround is because its passenger yield is getting better, its passenger load factor is getting better and its aircraft utilisation is getting better.
Earlier, for example they were having problems relating to shortage of crew. Now, they have done the recruitments and this problem is a thing of the past. The only assumption being made here is that the oil prices will continue to rule soft."
The minister said: "Air India had a problem of debt and that has been a problem but the airline has informed us that this is the first year that they are not going to incur operational loss and that is music to my ears. There was a turnaround plan and a plan to financially restructure it and it had been approved by the government many years ago and that has been implemented. But we are seeing that the turnaround that is coming is faster than the planned and this is good news."
When asked to compare its woes with other airlines like Kingfisher, the minister said it is not fair to compare as there is no cheating involved here and, Choubey added, "the airline has never defaulted."
Secondly, from last December onwards, for the first time in 10 years, the airline has been making operational profits though it is still making net losses primarily because of the interest burden. But operationally, it is EBITDA positive. As per plans, it has been envisaged that the airline will turnaround by 2020 but as it appears now, Air India is likely to turnaround 18 months prior to 2020, which means it will post net profit by 2019. They are expected to show operational profits this year. So, I think, Air India has turned the corner if only the oil prices continue to rule soft.