Airlines owned by Tata group posted a loss of Rs 15,530 crore in FY 23 as the group undertook impairment charges of Rs 5,103 crore on impairment charges on old aircraft of Air India. In total Air India registered a loss of Rs 11,216.32 crore while earning revenue of Rs 37,928.70 crore, according to the annual report filed by Tata Sons.
Air India Express, which is Air India’s subsidiary is the only profit making entity reporting a net profit of Rs 116.84 crore while other group airlines – AirAsia India, and Vistara – posted a loss of during the last fiscal year.
Air Asia India posted a net loss of Rs 2,750 crore against Rs 2,178 crore in FY 22 while Vistara in which the group holds 51% registered a loss of Rs 1,393.34 crore against Rs 2,031 crore loss last fiscal.
The salt-to-steel conglomerate which took over Air India last year in January is undertaking a restructuring of its airlines portfolio. As part of that AirAsia India and Air Express will be merged to form a low cost airlines while Vistara will get merged into Air India to operate as a full service airline. The combined entity has ordered 470 aircraft early this year.
The total order value of the new planes, according to industry sources, is close to $30 billion. Payment will be made in parts over the years. In June, the airline made pre-delivery payments (PDPs) to Boeing for 220 aircraft. PDPs are instalments that an airline has to pay the manufacturer when the aircraft are being built. It can amount to about 30% of the price of the aircraft.Since the Tata group took over Air India, it has significantly invested in the airline targeting to refurbish interior of aircraft, on time performance.The airline has undertaken a $400 million project to refurbish and revamp existing aircraft, which will include ripping out their decrepit interiors. Sources said that around half of that has already been deployed. Air India did not comment.Officials said that there is a gradual improvement in yield from operations, especially on international routes, with an upswing in both domestic and global travel. An executive said that the airline has registered 25% improvement in unit revenue while increasing load by 5%.
”The airline has been able to fill up aircraft despite charging high fare which implies significant improvement in revenue performance. While before privatisation Air India was earning Rs 70 crore per day, it earns Rs 100 per day now even with lower capacity,” said a person aware of the functioning of the airline.
Yields of airline has increased significantly in both domestic and international routes as demand is outstripping supply as new aircraft induction remains slow due to supply chain constraint.
Air India with its ultra-long haul routes to North America and Europe has been a beneficiary of that. Simultaneously a closure of Russian airspace for US and European airlines, making their transit time to India longer and in some cases making many flights unviable has benefited Air India.