Air India misses operating profit target by nearly 65%.
Air India, which turned operationally profitable last fiscal, reported an operational loss of Rs 246.14 crore in the three months ended June 2016. This was drop of 22% from the operating loss the airline posted in the same period last year. Air India had posted an operating loss of Rs 315.37 crore in the year-ago period, Minister of State for Civil Aviation Jayant Sinha informed the Lok Sabha .
"The target fixed by Air India for operating profit for the first quarter of 2016-17 was Rs 87.28 crore against which the company has posted an operating loss of Rs 246.14 crore in the first quarter of 2016-17," he said in a written reply to the Lok Sabha. The airline missed its target by 64.5%.
Sinha said the main reason for operating loss was the decline in "revenue yields by around 6% over the budgeted target resulting in decline in passenger revenue".
Besides, there was a fall in cargo revenue compared with budgeted estimates. "The first quarter of the financial year is a lean traffic season for domestic aviation traffic and the same picks up only in the second half of the year during which the company will be aiming at achieving an overall operating profit," Sinha said.
Under the turnaround plan, the airline is projected to see an operating profit of Rs 1,086 crore in 2016-17. During the same period, net loss and revenues are expected to be Rs 1,989 crore and Rs 22,206 crore, respectively, as per the provisional figures.
For the first time in nearly a decade, Air India reported an operating profit of Rs 105 crore in the last fiscal.
According to Sinha, the airline has been facing losses in the past few years on account of a multitude of factors.
These include high interest burden and airport user charges, adverse impact of exchange rate due to weakening of the rupee, increase in competition, especially from low cost carriers and liberalised bilaterals to foreign airlines, he added.
As part of the turnaround plan, the minister said that till date, Rs 23,933 crore has been released as equity support to Air India.
Various steps such as rationalisation of certain loss making routes, closure of overseas offline offices at certain locations and phasing out of old fleet and consequential reduction in maintenance costs have been initiated to reduce the airline's losses.
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