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Civil Aviation Minister reviews performance of Air India including its financial turnaround plan

Direct News Source

25-Jul-2010 The Minister for Civil Aviation Shri Praful Patel reviewed the performance of Air India including its plans for financial turnaround in Mumbai today.

The CMD, COO, the Board of Directors including the independent and the functional directors of Air India were present at the meeting. Following this the Minister also held detail discussions with the representatives all the Air India Unions and briefed them about the plans.

National Aviation Company of India Limited registered improvement in its operating performance for the first quarter of 2010-11.

Highlights of the performance for the first quarter 2010-11 vis-a-vis first quarter of 2009-10:

· Traffic Revenue went up by Rs 638 Crs - Passenger Revenue Rs 546 Crs (28 per cent growth) and cargo revenue by Rs 92 Crs (61 per cent) over corresponding quarter last year thus reflecting a rebound in traffic;

· Passenger load factor on the domestic was 75 per cent vis-a-vis 67 per cent.

· Passenger load factor on international sectors was 66 per cent vis-a-vis 62 per cent.

· Yield went up by 14 per cent on the net work;

· Passengers carried averaged to 36,000 per day, an increase of 18 per cent;

· Despite the decrease in the effective fleet strength due to the phase out of the old fleet, reduction in the leased fleet, capacity offered remained the same thus indicating better operational efficiency;

· Till date 20 wide body Boeing aircraft and 43 A320 family aircraft have been inducted in the fleet in the last three years thus reducing the average age of the fleet.

However, the improvement in the financial performance of Q1 was offset by the following factors:

· Fuel cost increased by 396 Crs- mainly due to 33 per cent price increase.

· Depreciation and interest due to the induction of the new fleet went up by Rs 292 Crs.

In order to reduce its operating losses, NACIL has projected an aggressive 29 per cent increase in its operating revenue for FY 2010-11 vis-à-vis FY 2009-10.

HIGHLIGHTS OF THE TURNAROUND PLAN 2010-2014

A. CORPORATE VISION AND MISSION

· TURNAROUND PLAN DOC ENVISAGES A CORPORATE VISION - TO BE THE LEADER IN INDIAN AVIATION AND INDIA'S AMBASSADOR TO THE WORLD;

· CORPORATE MISSION IS TO DELIVER THE HIGHEST QUALITY OF SERVICE AROUND THE WORLD AND BE THE EPITOME OF INDIAN HOSPITALITY;

· BE INDIA'S FLAG CARRIER AND PROVIDE SEEMLESS TRAVEL WITHIN INDIA AND THE WORLD.

B. FINANCIAL RESTRUCTURING :

· RESTRUCTURING WORKING CAPITAL LOANS THRU MIX OF BONDS GUARANTEED BY GOVT WITH LONGER TENOR AND BULLET PAYMENT;

· LAND/BUILDINGS MONETISED EITHER THROUGH OUTRIGHT SALE OR AS SECURITY FOR RAISING FRESH LOAN;

· EQUITY INFUSION BY GOVERNMENT TO STRENGTHEN THE BALANCE SHEET;

· RELEASE OF SECURITY GIVEN UNDER LONG TERM LOANS TO PROVIDE SECURITY FOR WORKING CAPITAL LOANS TO REDUCE BORROWING COST.

C. OPERATIONAL RESTRUCTURING GOALS:

· GOALS TO BE ACHIEVED BY 2015 - 25M DOMESTIC AND 15M INTERNATIONAL PASSENGERS;

· ONTIME PUNCTUALITY 93 PER CENT;

· 75% LOAD FACTOR WITH TARGET PAX REVENUE OF RS 35000 CRS.

· TARGET NON PAX REVENUE OF RS 6500 CRS.

· COVERING THE MARKET WITH DIFFERENT BUSINESS MODELS VIZ., LOCAL FEEDER SERVICES,LCC,HIGH QUALITY MAINLINE OPERATION AND CARGO;

· PROVIDING NON-STOP/ONE STOP CONNECTIVITY;

· MOVING TO A HUB CARRIER (DELHI AND MUMBAI HUBS SUPPORTED WITH SMALLER HUBS WITHIN AND OUTSIDE INDIA);

· DEVELOP A STRONG FEEDER NETWORK.

D. FLEET SIZE

· 35-45 FEEDER AIRCRAFT,120-150 NARROW BODY AIRCRAFT FOR DOMESTIC OPERATIONS,50-55 WIDEBODY AIRCRAFT FOR MEDIUM AND LONG TERM INTERCONTINENTAL TRAFFIC;

· 25-30 NARROW BODY PLUS 4-6 WIDEBODY AIRCRAFT FOR LOW COST OPERATIONS;

· CLUSTER OF MAJOR 60 CITIES WILL BE CONNECTED USING INDIAN HOPPER AND MAINLINE,INTERNATIONAL LONG HAUL WILL BE OPERATED THROUGH PRIMARY HUBS BY MAILINE-INDIAN HOPPER WILL SERVE FIVE REGIONS IN DOMESTIC MARKETS BRINGING TRAFFIC ALSO FOR MAINLINE.

E. BUSINESS PROCESS AND ORGANISATION

· INTRODUCE BEST PRACTICS TO SUPPORT JOINING OF ALLIANCE

· STRONG IT BACKBONE TO SUPPORT BUSINESS PROCESSESS

· MRO AND GROUNDHANDLING TO BE SHIFTED TO SUBSIDIARY COMPANIES

· CATERING ,HOSPITALITY AND INDEPENDENT TRAINING CENTER TO BE SEPARATE BUSINESS UNITS

· NEW GOVERNANCE STRUCTURE WITH A SUPERVISORY BOARD AND EXECUTIVE BOARD

F. AIR INDIA EXPRESS

· DOMESTIC AND INTERNATIONAL LOW COST CARRIER WITH OWN BRAND

· CAPTURE LOW COST MARKET IN INDIA AND COMPETE WITH INCOMING LCC

· HANDLING OF SEASONAL CAPACITY FOR HAJ FLIGHTS,ADHOC CHARTERS ETC.