Air India Reports A Profit For The First Time In 10 Years

The Maharaja is smiling. Air India, after a whole decade of consistent losses, has finally registered an operating profit this year. This is the first time the entity has generated a profit since its merger with Indian Airlines to become India’s flagship carrier. This is two years ahead of the turnaround plan that was announced by the government last year.

Air India netted an operating profit of Rs. 8 crore this year.  This was after the company managed to cut its operational expenses by 11% compared to last year. This is in part been aided by falling fuel prices, which account for around 30% of expenses at the national carrier. Air India also managed to carry more passengers this year compared to last year, seeing 17.77 million flights this fiscal compared to 16.88 million last year.

An employee is seen behind the ticket window of India's flagship carrier Air India displaying its logo the "Maharaja" at the domestic airport in Mumbai on April 28, 2011. Air India said at least 50 of its flights, including one on an international route, have been cancelled since the start of the pilot's strike over pay. AFP PHOTO/Indranil MUKHERJEE (Photo credit should read INDRANIL MUKHERJEE/AFP/Getty Images)
(Photo credit should read INDRANIL MUKHERJEE/AFP/Getty Images)

But leaving its operational business aside, the company is still mired in losses. Its losses stood at Rs. 5859 crore this fiscal, compared to Rs. 6279 crore in 2014-2015. The company also owes a staggering amount of money to the government – as of March 2015, its borrowings stood at Rs. 51,000 crore. Rs. 22,000 crore of this is from loans taken to buy new aircraft.

Air India is one of the government’s worst performing entities, and had been classified as “sick” by the heavy industries ministry in March last year. There have also been growing talks about its privatization, which is expected to reverse its fortunes.

But these latest results provide a glimmer of hope for the national carrier. While it’ll find it hard to shake off its image of a dowdy government company, operational profit could help it move towards greater efficiency, and perhaps, better service.

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