Mumbai: The loss-making Air India Ltd may turn around by 2021, aided by a government bailout and several cost-saving and revenue-generating measures, a top official said.

“There is a turnaround plan approved by the government. All the grants and financial assistance by the government are linked to achievement of turnaround targets. Roughly around 2021, we can expect the turnaround would be reasonably complete for Air India," said Ravindra H. Dholakia, member, board of directors, Air India.

Dholakia, talking on the sidelines of the 110th birth anniversary celebrations of industrialist J.R.D. Tata, said the airline’s performance has improved and is “improving steadily". He, however, added that the environment has changed since the turnaround plan was approved.

Vistara (an airline floated by Tata Sons Ltd and Singapore Airlines waiting for final approvals) was not there when Air India prepared its turnaround plan. We did not know the dollar will go up to 60. But at the same time, nobody knew that jet fuel prices would go down," Dholakia said.

The government approved a 30,000 crore package to rescue the airline in April 2012. This included an upfront equity infusion of 6,750 crore and assured equity support of 23,481 crore till 2020-21. Banks have recast their exposure to the airline, resulting in interest savings of 1,000 crore a year for the airline. Air India had a total debt of 40,000 crore, as on 30 September 2014.

The state-run airline is expected to post a net loss of 3,900 crore for the last fiscal. It posted a net loss of 5,100 crore in 2012-13 and a net loss of 7,100 crore in 2011-12.

Dholakia, however, said the yearly equity infusion is not sufficient to support Air India as the annual losses are more than the equity infusion.

Dholakia, who teaches at the Indian Institute of Management, Ahmedabad, is also heading a five-member committee appointed by the aviation ministry to suggest ways to cut costs and utilize resources optimally at Air India.

“Efficient operations, on-time performance, cost-cutting measures and revenue generation measures are going to help Air India turn around. The most important thing is to keep your head above the water levels till then," Dholakia said.

Experts, however, are not convinced that the revival plan will work.

Hormuz P. Mama, an independent aerospace analyst said the fundamentals of Air India are still not sound. “Instead of running like a tight ship, Air India is run on the basis of social obligations against intense competition by private players. Air India should have been given a free hand to run its operations," Mama said.

According to Dholakia, Air India has improved its on-time performance and passenger load factors considerably. However, he admitted that Air India has hurdles, including legacy cost, lack of route rationalization and a bloated workforce.

Competition has forced India’s airlines to cut fares to attract passengers, further denting profitability. India’s airlines lost an estimated $1.95 billion in 2012-13 on a combined revenue of $9.5 billion due to high fuel and other operational costs, according to consulting firm Centre for Asia Pacific Aviation.

Apart from AirAsia India and Vistara, adding further competition, last year, Abu Dhabi-based Etihad Airways bought a 24% stake in Jet Airways (India) Ltd for 2,058 crore, giving the Indian counterpart more financial muscle to compete.