New Delhi: Air India on Friday announced an ambitious plan to return to profitability and maintain its status as the biggest airline in India. The plan includes an IPO and selling old planes out.
The Chief Managing Director of Air India, Arvind Jadhav, in a press conference, said that Air India will be back in profit after 36 months. He also said that the company will come up with an IPO in the next 18 months.
Among the revamp plans is launching a domestic low cost airline in nine months’ time and re-evaluating aircraft purchase and financing processes.
Air India will also restructure existing debt and fleet rationalization particularly matching capacity with the availability of demand. This may of course mean selling off some aircraft.
The target is also to ensure the phasing out of old aircrafts and returning of the leased ones, Jadhav said.
Considering that the market pressure would not cease before the next 2-3 years, the CMD stated that despite the loss making position, “we still see passengers coming to us.”
Among the vital points that he made were that flight delays will be tackled to be reduced to minutes.
Jadhav sounded proud about the fact that ever since he had been appointed as the head of the airline, not even a single letter had been written to the government asking for a single penny let alone a bail out package.
Air India faces a financial crisis after posting an estimated USD 1bn loss for the fiscal year ended March 31. "There is a lot of excess flab on the entire body of Air India," Civil Aviation Minister Praful Patel had said recently.
Air India, which is estimated to suffer a loss of Rs 7,200 crore in 2008-09, has been overburdened by its working capital borrowings worth Rs 17,000 crore. It has overdrafts from 15 banks.
At the first meeting on its financial restructuring last month, Air India had sought government`s urgent help and urged for equity infusion of about Rs 2,500 crore and a soft loan of Rs 10,000 crore for five years. While the government may make only a partial contribution, a major part of this package will be is likely to be through partial disinvestment of government equity or issuance of initial public offer, sources had told earlier.