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AI posts operational profit of Rs 22 crore after four years

Apart from an increase in passengers, the airline also registered an uptick in its overall passenger load factor at 66.3% during Apr-Nov 10, up from 63.1%.

, ET Bureau|
Jan 04, 2011, 04.34 AM IST
NEW DELHI: National carrier Air India has started the new year on a positive note, making operational profit of 21.66 crore in November 2010 for the first time in four years. The importance of the cash-profit can be guaged by the fact that in November 2009 the airline had registered losses of around 150 crore.

The airline has posted better performance on the back of a significant improvement in efficiency, better yield management strategies and passengers's faith in the national carrier, an official statement said. "We expect the company to be back in the black by the end of the financial year," a senior Air India official said. Of the 194 services (flights) of the carrier's network, 108 have made cash profits in November 2010, the statement added. This is in line with the 22.6% increase in revenues at 7,250 crore that the airline has recorded over April-November 2010. Also, its net losses have decreased by 23% to 5,551 crore in 2009-10 from 7,189 crore in the previous financial year.

Apart from an increase in passengers, the airline also registered an uptick in its overall passenger load factor at 66.3% during April-November 2010, up from 63.1% in the year-ago period. "Airlines are lucky to be in such a buoyant environment. The question is whether AI is working enough to be able to make itself the airline of choice for passengers when demand increases. They have to look into how they service their debts," consultancy firm Auctus Advisors MD Manish Chheda said.

Underlining the national carrier's good performance over the past few months, the civil aviation ministry has also said that it is not in favour of referring Air India to the Board for Reconstruction of Public Sector Enterprises (BRPSE) anytime soon because it believes the airline is not in such a bad a shape. "The company's net worth has not eroded at all and the new company, NACIL, has posted losses only for two years. It is premature to look at the BRPSE option," a senior ministry official said. On December 30, 2010, the heavy industries and public enterprises minister Vilasrao Deshmukh, after meeting civil aviation minister Praful Patel, had said that all issues over Air India's turnaround plan were settled and the airline would have to come to the PSU revival body (BRPSE) if needed.

The airline has debts of 40,000 crore and has a narrow equity base of just about 1,000 crore. With accumulated losses of 5,500 crore, the airline has embarked on a four-year turnaround plan last year, which seems to be bearing results with the national carrier reporting improvements. The carrier has also received equity infusion of 1,200 crore from the government, which will help improve its balance sheet.
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