Air India posts Rs246 crore operating loss in April-June quarter

The main reason for operating loss of Air India was the decline in passenger and cargo revenue, minister of state for civil aviation Jayant Sinha told the Lok Sabha


Under the turnaround plan, Air India is projected to see an operating profit of Rs1,086 crore in 2016-17. Photo: Ramesh Pathania/Mint
Under the turnaround plan, Air India is projected to see an operating profit of Rs1,086 crore in 2016-17. Photo: Ramesh Pathania/Mint

New Delhi: Air India, which turned operationally profitable last fiscal, reported an operational loss of Rs246.14 crore in the three months ended June 2016.

The operating loss in the first quarter of this financial year has come down from Rs315.37 crore in the year-ago period, minister of state for civil aviation Jayant Sinha informed the Lok Sabha on Thursday.

“The target fixed by Air India for operating profit for the first quarter of 2016-17 was Rs87.28 crore against which the company has posted an operating loss of Rs246.14 crore in the first quarter of 2016-17,” he said in a written reply to the Lok Sabha.

Sinha said the main reason for operating loss was the decline in “revenue yields by around 6% over the budgeted target resulting in decline in passenger revenue”.

Besides, there was a fall in cargo revenue compared with budgeted estimates. “The first quarter of the financial year is a lean traffic season for domestic aviation traffic and the same picks up only in the second half of the year during which the company will be aiming at achieving an overall operating profit,” Sinha said.

Under the turnaround plan, the airline is projected to see an operating profit of Rs1,086 crore in 2016-17. During the same period, net loss and revenues are expected to be Rs1,989 crore and Rs22,206 crore, respectively, as per the provisional figures.

For the first time in nearly a decade, Air India reported an operating profit of Rs105 crore in the last fiscal.

According to Sinha, the airline has been facing losses in the past few years on account of a multitude of factors. These include high interest burden and airport user charges, adverse impact of exchange rate due to weakening of the rupee, increase in competition, especially from low cost carriers and liberalised bilaterals to foreign airlines, he added.

As part of the turnaround plan, the minister said that till date, Rs23,933 crore has been released as equity support to Air India. Various steps such as rationalisation of certain loss making routes, closure of overseas offline offices at certain locations and phasing out of old fleet and consequential reduction in maintenance costs have been initiated to reduce the airline’s losses. PTI

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