By Staff Correspondent
Air India, the Tata-owned airline, has reportedly written off an estimated ₹7,000 crore in the financial year 2023 as part of impairments related to the carrier’s defective aircraft and engines, as well as its low-cost subsidiary AirAsia India. Despite these write-offs, industry insiders suggest that the airline’s losses have diminished, and its earnings before interest, taxes, depreciation, amortisation and restructuring or rent costs (ebitdar) have turned positive, thus indicating operational-level profitability.
“Air India, in conjunction with its subsidiary Air India Express, was ebitdar positive in FY23 and nearly broke even after lease payments, excluding AirAsia India where most of the losses were concentrated,” remarked an industry source. It has been estimated that the net loss at slightly more than ₹2,500 crore for FY23, compared to a ₹9,556 crore loss in FY22.
Impairment costs for AirAsia India are estimated to exceed ₹1,500 crore, with an additional ₹5,000 crore attributed to Air India’s ageing fleet. Insiders suggest that the financial performance of Air India, post-write-offs, was robust for the year ending March, attributing this to the new management’s focus on operational efficiency and cost containment.
Following its privatisation, Tata Group assumed control of Air India in January 2022 and is currently integrating its various aviation entities. Mergers are planned between Air India Express and AirAsia India, and Vistara with Air India.
Despite the scale of the losses, industry watchers argue that the restructuring process is yielding positive outcomes. The company’s positive ebitdar signifies operational-level profitability once tax, rent, and restructuring costs are discounted.
Senior executives highlight the airline’s commitment to cost management and safety, with plans to auction or scrap numerous aircraft as part of a safety-first approach. Air India plans to invest $400 million in reviving and refurbishing its ageing fleet, emphasising a commitment to tech-driven modernisation without compromising on safety.
Air India posted a net loss of ₹9,556.5 crore on a net revenue of ₹19,815.9 crore in FY22. FY21 figures indicate a net loss of ₹7,017.4 crore on a revenue of ₹12,104 crore. FY23 revenue figures remain undisclosed.
Under the leadership of CEO Campbell Wilson, Air India is undergoing significant operational restructuring to enhance revenue generation and reduce costs. Wilson’s remit includes creating a customer-focused, service-oriented culture alongside improving operational efficiency.
The company has observed a gradual improvement in revenue from operations, particularly on international routes, alongside a recovery in domestic and global travel. One executive cited a 25% improvement in unit revenue alongside a 5% increase in load. The executive added that, despite higher fares, the airline’s ability to fill aircraft reflects a significant enhancement in revenue performance. Since privatisation, Air India’s daily earnings have increased from ₹70 crore to ₹100 crore, despite a reduction in capacity.
