Lok Sabha Question No. 353 (UNSTARRED), answered on 2016-11-17
Subject: Losses Incurred by Air India
Ministry: CIVIL AVIATION
Asked by: CHANDRAKANT BHAURAO KHAIRE, JAYAKUMAR JAYAVARDHAN, KONDA VISHWESHWAR REDDY

353.

## GOVERNMENT OF INDIA MINISTRY OF CIVIL AVIATION LOK SABHA

UNSTARRED QUESTION NO\_ 353 (To be answered on the November 2016) 17th

## LOSSES INCURRED BY AIR INDIA

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SHRI CHANDRAKANT KHAIRE DR: J JAYAVARDHAN SHRI KONDA VISHWESHWAR REDDY

Will the Minister of CIVIL AVIATION

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be pleased to state: -

- (a) the target fixed by Air India as operating profit during the first quarter of the current fiscal;
- (b) whether Air India has reported operating loss of Rs.246 crores during the first quarter of the current fiscal as other listed airlines in the country have made net profits during the same period;
- (c) if s0, the details thereof and the reasons therefor;
- (d) the details of total revenue generated and loss incurred by Air India during the last three years and the current year, year-wise along with the reason therefor and the bail out packages given to the company during the said period;
- (e) the corrective steps taken by the Government to increase operating revenue for Air India; and
- (f) the other steps taken by the Government to reduce overheads, rationalize costs and boost revenue growth of Air India?

## ANSWER

Minister of State in the Ministry of CIVIL AVIATION

(Shri Jayant Sinha)

(a) to (c): Air India Ltd has posted an Operating Loss of Rs 246.14 crores in the first quarter of 2016-17 i.e. April t0 June 2016 as compared to an Operating Loss of Rs 315.37 crores during the corresponding first quarter of FY 2015-16. Accordingly, the Operating Loss reduced by Rs 69.23 crores over

the same period of last year:

The first quarter 0f the financial year is a lean traffic season for domestic aviation traffic and the same up only in the second half of the year during which the company will be aiming at achieving an overall Operating Profit: picks

The target fixed by Air India Ltd for Operating Profit for the first quarter of 2016-17 was Rs 87.28 crores as which the company has posted an Operating Loss of Rs 246.14 crores in the first quarter of 2016-17. The main reasons for the Operating Loss was the decline in the Revenue Yields by around 6% over the budgeted target resulting in the decline in the Passenger Revenue. There was also a decline in Cargo Revenue during the period over the budgeted estimates: against

(d): The Net Loss and Operating Profit/Loss of Air India, Equity Infusion and Total Revenue generated given by the Government under the Turnaround Plan (TAP) during the last three and the current year are attached as Annexure years

Air India Ltd has been losses in the past few years on account of a multitude of factors. The main reasons for the losses of the company are given hereunder: facing

Increase in competition especially from low cost carriers

High interest burden

High Airport User Charges

(v) Liberalized Bilaterals to Foreign Carriers:

Adverse impact of exchange rate variation due to weakening of the Indian Rupee

- (e) & (f): In view of the losses suffered by Air India up to 2010-11 and its mounting debt burden, the Government\_has approved a Turnaround Plan (TAP)Financial Restructuring Plan (FRP) for operational and financial turnaround of Air India. The TAP/FRP envisages equity induction by the Government subject to achievement of certain financial and operational parameters. The details of financial support approved under TAPIFRP are as follows:

ii Equity for cash deficit support of Rs: 4552 crores till FY 2017-18

iUpfront equity of Rs: 6750 crores in FY 2011-12

iii.Equity for guaranteed aircraft loan till FY 2021 of Rs: 18,929 crores.

Rs. 11,951 crores towards interest and Rs. 7400 crores towards principal iv.For GOI guaranteed Non-Convertible Debentures (NCDs), an amount of

Till date, an amount of Rs. 23,993 crores has been released as equity support to Air India:

As a part of the Turnaround Strategy for Air India Ltd,, the company with the overall support of the Govt: has initiated a number of steps in order to cut costs and losses  These steps, inter-alia, include the foliowing:

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- i.Route rationalization of erstwhile Al & IA route and elimination of route network involving parallel operations.
- iiiPhasing out of old fleet and consequential reduction in maintenance cost iv-Joining of Star Alliance.
- ii Rationalization Of certain loss making routes
- v Enhanced utilization %f new fleet resulting in production of higher Available Seat Kilometers (ASKMs):

vii Introduction of PSS (Passenger Service System) to have single code and SAP ERP based soiutions throughout the organization in terms Of increase in revenue and decrease in cost:

vi Closure of overseas offiine ofiices at certain locations.

## ANNEXURE

The Government under the Turnaround Equity Infusion given by the Plan (TAP) the last three years and the current are given hereunder: year during -

| Particulars                                 | Amount in Rs Crores   | Amount in Rs Crores   | Amount in Rs Crores   | Amount in Rs Crores   |
|---------------------------------------------|-----------------------|-----------------------|-----------------------|-----------------------|
|                                             | 2013-14               | 2014-15               | 2015-16               | 2016-17 (Prov)        |
| Operating Profit/(Loss)                     | (3977.89)             | (2636.19)             | 105.00                | 1086.00               |
| Net Profit/(Loss) after Tax                 | (6279.60)             | (5859.91)             | (3836.78)             | (1989.00)             |
| Equity Infusion given by the Govt under TAP | 6000.00               | 5780.00               | 3300.00               | 1713.00               |
| Total revenue                               | 19480.74              | 20613.16              | 20526.12              | 22206.00              |