Air India reports a positive EBITDAR and cuts down net losses despite challenges in FY23
Air India, owned by Tata, writes off ₹7,000 crore in FY23 due to aircraft and engine impairments, but reports positive EBITDAR and reduced net loss. The airline focuses on cost savings and modernization for improved operations.
Tata-owned Air India wrote off approximately ₹7,000 crore in the fiscal year 2022-2023 due to impairments caused by faulty aircraft and engines, as well as losses from low-cost airline AirAsia India, according to sources familiar with the matter. Despite the write-offs, Air India reported a positive EBITDAR (earnings before interest, taxes, depreciation, amortization, and restructuring or rent costs) and a reduced net loss of slightly over ₹2,500 crore compared to ₹9,556 crore in the previous fiscal year.
The losses incurred by AirAsia India were largely covered by its former joint venture partner, AirAsia Bhd. The financials of Air India and its subsidiary Air India Express were healthy for the year ending in March, as the new management focused on operational efficiencies and cost savings. AirAsia India accounted for an impairment cost of over ₹1,500 crore, while around ₹5,000 crore was attributed to Air India's old planes and engines.
The Tata Group acquired Air India in January 2022 after its privatization and is currently in the process of consolidating its aviation units. Air India Express is being merged with AirAsia India, and Vistara with Air India as part of this consolidation effort.
The positive EBITDAR indicates that the company is profitable at an operating level, excluding certain expenses like taxes, rent, and restructuring costs. Air India's focus is on modernizing its aircraft and systems while ensuring safety remains a top priority. The airline plans to auction or retire several grounded aircraft and has allocated $400 million to revive and refurbish old planes.
Tata Sons has implemented various measures to improve revenue generation and reduce costs. The current CEO of Air India, Campbell Wilson, is leading efforts to transform the airline through a new operational structure and improved systems and processes. There has been a gradual improvement in revenue, particularly on international routes, with an increase in both domestic and global travel. The airline has achieved a 25% improvement in unit revenue and a 5% increase in load. Despite charging higher fares, Air India has been able to fill up its aircraft and has seen a significant improvement in revenue performance, earning ₹100 crore per day after privatization, compared to ₹70 crore per day previously.
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