Air India may register Rs. 2,636 crore losses in FY16

The Dollar Business Bureau

The Government of India on Thursday announced that Air India’s losses have reduced to almost half to Rs.2,636 crore in 2015-16 fiscal when compared to Rs.5,859.91 crore in 2014-15. 

According to the Civil Aviation Minister Mahesh Sharma, Air India has been reporting losses for the last few years due to various reasons. These being, high interest costs, stiff competition from budget airlines and variations in the exchange rate due to a weak rupee.

To keep it from sinking further, in 2012, the finance ministry under the UPA-led government provided Rs.30,231 crore to the carrier under a turnaround plan (TAP) for a period of nine years.  This infusion of equity included financial support to repay the principal as well as the interest accrued, on the government loans, taken for acquiring newer aircrafts by the airline.

Sharma said the ministry as per the 2012 TAP will further provide Rs.18,929 crore for repayment of loans and interest till FY2021. “Till March this year, the government had already infused Rs.22,280 crore into the carrier as part of the bailout package,” he said. Last year, the national carrier Air India had cleared its aircraft loans and interest liabilities.

Air India’s market share had declined in the last three years, cornering 16% of the total domestic traffic till February compared to a market share of 18% in FY 2014-15. Though Air India introduced new aircrafts into its fleet, the rate of newer addition of aircrafts by its competitors was much larger in the domestic market. The airline also suffered losses due to 334 delays of more than 15 minutes, caused by technical snags, between April 2015 and March 2016. However he assured the house that these technical snags have not adversely affected the safety of Air India planes as regular improvements have been incorporated into the intrinsic maintenance of the plane.