Air India trims losses by 40% in run-up to disinvestment

New Delhi: Air India Ltd narrowed its operational losses between April and December by over 40%, ahead of the planned sale of the state-run carrier, which is expected to kick off next week, two senior airline officials said on Friday.

The reduction in losses was the outcome of a lower interest burden after half of Air India’s debt was transferred to a Special Purpose Vehicle (SPV), as well as better operational performance, one of the officials said.

Operational losses in the April-December 2019 period stood at ₹1,045 crore, down from ₹1,960 crore in the same period of the previous year, the first official said.

“The airline earlier spent close to ₹4,000-4,500 crore a year for servicing its debt. This figure has now come down to ₹1,400-1,500 crore after a large chunk of the airline’s debt was moved into an SPV last year,” said the second official mentioned above.

Meanwhile, Air India’s overall passenger yield, or revenue earned per kilometre, rose by about 6.7% during the comparative nine month period, the first official added.

Air India, which had a 12.7% share of the domestic market, carried 18.36 million domestic passengers in 2019, according to data from the Directorate General of Civil Aviation. The national carrier had ferried 17.61 million passengers in 2018.

In February 2019, the central government set up Air India Assets Holding Ltd to park accumulated working capital loans not backed by any asset, standing at about ₹29,464 crore, four subsidiaries, non-core assets such as paintings and artefacts, land bank, and other non-operational assets. The Centre plans to sell these assets.

Air India’s accumulated losses in the past decade stood at about ₹69,575.64 crore, aviation minister Hardeep Singh Puri had told Parliament in December.

The national carrier posted a provisional net loss of ₹8,556.35 crore in FY19, against a net loss of ₹5,348.18 crore in the previous fiscal.

The Centre hopes to divest its entire stake in the New Delhi-based carrier after failing to offload a 76% stake last year.