Air India to become profitable company in eight years: report
22 September 2011
New Delhi: Air India is now projecting operating profits for the company five years after a turnaround plan is implemented. The freshly revised restructuring plan, prepared by the company for a group of ministers entrusted with the task of looking into reviving the company's fortunes, will be discussed next week.
The new projection is a dramatic climb down from earlier projections by the company that it would start making operating profits in the first year after implementation of the turnaround plan.
A finance ministry sub-committee had advised the airline to revise its projections and targets and submit a fresh proposal.
Unnamed senior airline officials are being quoted as saying that the revised plan projects operational profit after five years of the implementation of the plan and the company becoming profitable three years after that.
The projections in the new turnaround plan are on the basis of a growth rate of 12 per cent per annum compared to a growth rate of 18 per cent in the earlier plan.
The financially beleaguered airline is sinking under a mountain of debt. By some projections it has to repay Rs20,415 crore worth of loans before the end of this financial year.
AI has accumulated debts of Rs42,350 crore in all of which Rs20,185 crore are aircraft loans and Rs22,165 crore are working capital loans.
Airline officials indicate that the revised plan targets a market share of 30 per cent in five years, the same as that in the new turnaround plan.