The loss for this period was ₹1,045 crore whereas in the previous year, it stood at ₹1,960 crore.

Air India manages to pare losses by 40 in run-up to disinvestment
Money Air Inda Sale Saturday, January 25, 2020 - 19:25
Written by  S. Mahadevan

Air India managed to bring down the losses incurred by it in the nine months of this financial year, running from April to December 2019. The loss for this period was ₹1,045 crore whereas in the previous year, it stood at ₹1,960 crore. This is a fall of over 40% in losses and augurs well for the airline just when the government is seriously looking for a suitor.

The information itself does not come as a surprise since the government had transferred bulk of the national carrier’s debts to a special purpose vehicle. The cost of servicing those debts would definitely be off the shoulders of Air India. The airline appears to have made some improvements in its operational performance as well. The overall passenger yield calculated as the actual revenue divided by the number of passengers carried, has also increased this year by around 6.7%. This again is explained by the number of passengers carried by Air India in 2019, which was 18.36 million, compared to 17.61 million the previous year. The airline enjoys a market share of 12.7% in the domestic market.  

The interest burden on an annualised basis has come down drastically from ₹4,000 to ₹5,000 crore earlier to around ₹1,400 to ₹1,500 crore levels now. This is because around ₹30,000 crore of debts from the books of Air India stood transferred to Air India Assets Holding Ltd, a special purpose vehicle floated by the government with this very intention, of reducing the interest burden on the company and making it attractive for a prospective buyer.

The government will now hope that it can find a suitable buyer so that it can make the disinvestment and try to narrow the gap in the government’s finances.