Despite an increase in passenger revenues of just 2.85% year-on-year, Air India has reported a jump of 60% y-o-y rise in EBITDAR (earnings before interest, tax, depreciation, amortisation and rentals) to R3,412 crore for the nine months to December. In 2015-16, the airline reported a loss of R2,636 crore, primarily because of the high outgo on interest of close to R4,500 crore.
While the price of aviation turbine fuel has risen by about 12% in the last six months to R52,540 per kilolitre, the national carrier has managed to rein in other costs such as expenses on maintenance.
Air India’s domestic yields have been under pressure — in the April to December period they declined 9.2% y-o-y to R4.56. Domestic passenger revenues decreased by 3.7% y-o-y while the same on the international network grew by 6.4% y-o-y.
Other airlines too have seen yields falling in recent months. The average yields at IndiGo, for instance, fell 13% in the December 2016 quarter although volumes rose 38% y-o-y. The management attributed the drop in yields to the competitive environment as also the impact of demonetisation. At SpiceJet, the fall in yields during the December 2016 quarter was a much lower 3% y-o-y while volumes rose 39% y-o-y.
The country’s airline capacity in 2016 was 112 million askm (available seat km) compared with 92 million askm in 2015 across seven major airlines. The industry load factor in December 2016 was 88.7%, with IndiGo commanding the highest market share at 40.4%. Air India’s market share was 13.8%.
Air India is hoping long-term borrowings worth R8,000 crore will be restructured under the S4A scheme and is negotiating with bankers. The airline’s total debt is R46,000 crore. The airline proposes to phase out 21 aircraft (10 A320s, 3 A319s, 5 Boeing 747s and 3 ATR-72) and add 85 new aircraft to the fleet by 2020. The national carrier’s Ebitda in the April-December 2016 period has risen by 84% y-o-y to R2,160 crore.
An oversight committee comprising top officials from the finance and civil aviation ministries, and representatives of the consortium of banks has reviewed these numbers. In January, Rajiv Nayan Choubey, civil aviation secretary, told FE that Air India was expected to register operating profit this fiscal.