A day after the central bank approved the financial restructuring and turnaround plan for the national carrier, the Air India board decided to lease out excess capacity of two 747-400 aircraft and some 777-200 LR aircraft ?at a future date ? after the induction of Boeing 787.
The board approved the issue of RFP for 787 aircraft under the sale-and-lease-back mechanism, pending a final clearance from the Centre.
As a cost-saving measure, sources said that the airline also decided to withdraw meals from flights of less than 90 minutes’ duration. It is expected that the carrier will save around R20 crore annually through this measure.
The board reviewed the operations of the company and the progress on the implementation of the turnaround project (TAP) and the financial restructuring plan (FRP). Earlier, RBI issued an in-principle approval for the FRP of Air India and had agreed to provide the dispensation required with certain exceptions. The bankers give the nod to the restructuring programme subject to the certain issues being again taken with RBI.
Meanwhile, a key performance indicator, passenger revenue, for the month of October showed an increase of 5.2% even after the reduction of capacity by 2.9 % compared to the same period last year. ?While the passenger carried increased by 4.9%, the passenger load factor improved by 2.6%,” said an official communication of the company.
T he board took note of factors that negated the impact on profitability. These include an 18% increase in fuel cost amounting R1,097 crore. Also, Air India’s wage cost went up due to increase in gratuity provision (R295 crore) while depreciation went up by R300 crore due to addition in fleet. According to Air India, the interest cost went up by R860 crore due to increase in borrowing and hike in rates.