The Indian government will meet again with Air India's executives in January to discuss the carrier's plans to restructure its operations and return to profitability.
"We continue to work on our plans and there will be a review in January. This will review both current and future milestones regarding revenue enhancement and cost cutting measures," says a spokesman at the Indian flag carrier.
Air India's owner, the Indian government, has agreed to inject eight billion Indian rupees into the carrier to pay for its operations in November and December. This is part of a broader plan to keep the carrier afloat after Air India posted a net loss of 56 billion rupees ($1.2 billion) for the fiscal year ending 31 March 2009, more than double the 22 billion rupees it lost a year before.
Air India has been losing money for years and asked the government for a bail-out earlier this year. In October, civil aviation minister Praful Patel said the state would provide up to 50 billion Indian rupees, conditional on the carrier finding ways to cut costs by 30 billion rupees and raising revenues by 20 billion rupees over the next two years.
The airline has appointed consultants Booz Allen Hamilton to help with this, and it has reportedly identified around 70 proposals that could be implemented over the next 18 months. This could cut costs and enhance revenues by at least 50 billion rupees in that time.
Some measures include phasing out foreign pilots, cutting its network and reviewing its routes, rationalising fleets, and closing some foreign offices and recalling staff who are based there. The spokesman declined to speak on the specific measures that are being undertaken, but he says that "everything is being done" to ensure that the carrier is once again profitable.
He adds that Air India is benefitting as the operating environment becomes better, with passenger numbers increasing over the last few months as the economy recovers.
Air India carried 740,000 domestic passengers in October for an 18.6% market share, and had a load factor of 72.8% in that month. That is an improvement from September, when the carrier had 614,000 passengers with 17.5% market share, and a load factor of 67.5%.
"For the nine months from August, the aim is survival. We are succeeding in that now," says the spokesman. "In the nine months after that, we are aiming to trim the losses. In the 18 months from then, we aim to return to profitability. We plan to be in the black within the next three years."
Source: Air Transport Intelligence news
