Air India expected to shave off losses by around 40%, says civil aviation minister

National carrier Air India (AI) is expected to reduce its losses by around 40 per cent to Rs 3,529.80 crore during this fiscal although its debt burden stood at more than Rs 51,000 crore in the previous financial year, minister of state for civil aviation Mahesh Sharma said in Parliament on Thursday.

Till date, the government has pumped Rs 22,280 crore into the airline, which is expected to report an operating profit to the tune of Rs 6.20 crore in the current fiscal, ending on March 31, 2016, Sharma said in a written reply in the Lok Sabha.

The government-owned airline had in the financial year ended March 31, 2015, reported a net loss of Rs 5,859.91 crore, the minister further said.

Sharma said that AI has been suffering losses for the past many years due to several factors, including a high interest burden, increase in competition especially from the low-cost carriers and high debtequity ratio and adverse impact of exchange rate variation due to weakening of the rupee.

AI was provided a Rs 30,231-crore lifeline by the finance ministry in 2012 under a turnaround plan stretching over period of nine years to keep it afloat.

However, the package came with some specific riders. AI has a total debt burden of Rs 51,367.07 crore as on March 31, 2015. This amount includes Rs 22,574.09 crore outstanding on account of aircraft loans and the remaining amount comprises working capital.

As per the turnaround plan, the equity infusion also includes Rs 18,929 crore for the repayment of the government-guaranteed loans/interest till financial year 2020-21, he said.

In response to another question, Sharma said that AI has forwarded a proposal seeking issue of government guarantee of Rs 10,000 crore against which tax free bonds would be issued by the airline.

Replying to a question on total equity infusion in the carrier by the government as part of the 2012 bailout package, the minister said that AI has till date received Rs 22,280 crore, including Rs 3,300 crore in the last fiscal.

The sharp decline in crude oil prices during this fiscal has come as a major shot in the arm for AI and there has been some improvement in operational efficiency as well helping the government-owned airline to scrape through to a nominal operating profit.

The total accumulated losses of the airline, which was run to the ground during the erstwhile United Progressive Alliance regime, add up to around Rs 30,000 crore.

The carrier has been facing stiff competition from private budget carriers, who offer discounts and cheap seats to customers.