MUMBAI- Airlines under the Tata group umbrella reported a loss of Rs 15,530 crore during FY 23 due to the inclusion of impairment charges amounting to Rs 5,103 crore related to the old aircraft of Air India (AI).
Air India recorded a loss of Rs 11,216.32 crore, with revenue reaching Rs 37,928.70 crore, as detailed in Tata Sons’ annual report.
Tata Air India Group Reports Loss
Among the airlines under the Air India group, its subsidiary Air India Express (IX) stands out as the sole profit-making entity, reporting a net profit of Rs 116.84 crore. On the other hand, the other group carriers, AirAsia India (I5) and Vistara (UK), experienced losses in the last fiscal year.
AirAsia India recorded a net loss of Rs 2,750 crore, compared to Rs 2,178 crore in FY 22. Meanwhile, Vistara, in which the group holds a 51% stake, registered a loss of Rs 1,393.34 crore, compared to a loss of Rs 2,031 crore in the previous fiscal year.
The diversified conglomerate that acquired Air India in January last year is currently restructuring its airline portfolio.
As a component of this effort, AirAsia India and Air India Express are set to merge and form a low-cost airline. In contrast, Vistara will merge with Air India to function as a full-service carrier. This merged entity has already placed an order for 470 aircraft earlier this year.
According to insiders in the industry, the collective worth of the new aircraft orders amounts to nearly $30 billion. Payments for these planes will be staggered over several years. In June, the airline already provided Boeing pre-delivery payments (PDPs) for 220 aircraft.
Since the acquisition of Air India by the Tata Group, substantial investments have been directed toward the airline with the aim of enhancing interior quality and on-time performance.
The airline is executing a $400 million initiative to modernize and upgrade its existing aircraft fleet, involving completely renovating its outdated interiors.
Approximately half of this budget has already been allocated, although Air India has not provided official comments on this matter.
According to sources, there has been a gradual improvement in revenue generation from operations, particularly on international routes, coupled with an upsurge in both domestic and global air travel.
An executive disclosed that the airline had witnessed a 25% increase in unit revenue while concurrently achieving a 5% growth in passenger load.
“Despite implementing higher fares, the airline has managed to achieve high aircraft occupancy rates, signifying significant enhancements in revenue performance. Prior to privatization, Air India was generating Rs 70 crore in daily earnings. This figure has now surged to Rs 100 crore per day even with a slightly reduced capacity,” stated an individual knowledgeable about the airline’s operations to ET.
Yields on both domestic and international routes have witnessed substantial growth due to a demand-supply imbalance, as the introduction of new aircraft remains sluggish due to supply chain limitations.
Air India’s extended nonstop flights to North America and Europe have particularly benefited from this scenario.
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