Finance Minister Nirmala Sitharaman’s meeting on Air India disinvestment today, losses cross Rs 8,400 crore

Air India has a debt burden of over Rs 58,000 crore and servicing the loans is a major challenge for the national carrier as the annual outgo is more than Rs 4,000 crore. (File photo: Reuters)

Air India has a debt burden of over Rs 58,000 crore and servicing the loans is a major challenge for the national carrier as the annual outgo is more than Rs 4,000 crore. (File photo: Reuters)

Finance Minister Nirmala Sitharaman is scheduled to hold a crucial meeting on Wednesday regarding the disinvestment of Air India. The national carrier reportedly incurred a net loss of around Rs 8,400 crore in the financial year 2018-19. Which is why the meeting holds importance.

The total revenue of the state-run carrier stood around Rs 26,400 crore during the year under review.

Air India has reported an operating loss of around Rs 4,600 crore in the last financial year mainly due to rise in fuel prices and higher costs as Pakistan closed its airspace for Indian carriers which resulted in higher costs and caused a daily loss of Rs 3-4 crore.

Loss due to Pakistan airspace closure

During the three months since Pakistan’s airspace closure till June, the airline reportedly incurred an operating loss of Rs 175 to 200 crore.

And till July 2, the national carrier had lost Rs 491 crore , according to government data. Pakistan had closed its airspace after the India Air Force’s February 26 Balakot strike.

During the period, private airlines SpiceJet, IndiGo and GoAir lost Rs 30.73 crore, Rs 25.1 crore and Rs 2.1 crore, respectively.

The officials, however, expect that the debt-laden carrier to turn operationally profitable in 2019-20. Air India is projected to post an operating profit of Rs 700 to 800 crore, provided oil prices do not shoot up significantly and there is no steep fluctuation in foreign exchange rates.

Officials said the load factor and yields are improving for Air India, which currently flies to 41 international and 72 domestic destinations. Load factor is a measure of seat occupancy and yield refers to the average fare paid per passenger.

Total debt of Rs 58,000 crore

Air India has a debt burden of over Rs 58,000 crore and servicing the loans is a major challenge for the national carrier as the annual outgo is more than Rs 4,000 crore.

As part of efforts to clean up the balance sheet, Air India Assets Holdings Ltd (AIAHL), a special purpose vehicle of the national carrier, would issue bonds worth Rs 22,000 crore in the coming weeks, a senior official said. AIAHL on Monday raised Rs 7,000 crore through bonds sale at a lower rate and the issue was oversubscribed more than 20 times.