“Some of the routes were replaced with the right kind of aircraft upon the induction of Boeing 787 (Dreamliners) aircraft while the existing Boeing 777-200LR fleet, running on these routes, was phased out. The Boeing 747-400s which was not fuel efficient was also replaced by Boeing 777s,” said an official, adding: “The fuel saving which the airline has been able to achieve from September 2008 to March 2014 is around R1, 400 crore which is approximately 7% more than the saving we had over the benchmark 2008 year, in respect to the TAP.”
The TAP also requires Air India to achieve a total annual revenue of R35,000 crore in 2020 up from R14,627 crore in FY12. According to projections by the SBI Capital Market’s financial restructuring plan, the airline is to post a revenue of R21,521 crore, after a R2,425-crore loss during FY14. A senior Air India official told FE that the airline registered a total revenue of R19,170 crore, compared to a R5,388-crore loss during FY14.
The TAP, which suggested the hiving off of the ground handling and MRO units from the airline, also set a target for the airline to post R2,000 crore annual revenue from its MRO unit, R1,500 crore from its ground handling unit and R3,000 crore from its cargo operations by 2020. While two major units of the airline—ground Handling and MRO—has already been hived off into two separate units, namely Air India Air Transport Services (AIATSL) for ground handling and MRO as Air India Engineering Services (AIESL) from FY14, airline officials expect both units to be profitable in one-two years. “The budgeted revenue of AIATSL stands at R750 crore and AIESL at R650 crore for FY14 which includes third party revenue as well as handling Air India flights. The airline will infuse equity in these companies over a period,” the senior Air India official said.
The permanent staff of the airline, which at the time of the merger stood at 33,000, currently stands at 25,000. The airline expects this to fall to 11,000 by the end of FY15, after the staff of AIESL and AIATSL are completely transferred from Air India to their new companies, respectively.
“Though, both AIATSL and AIESL will come out with their separate financial reports from FY14, we expect the hiving off of the subsidaries, as far as the staff is concrened, to be completed by the end of FY15,”