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The Economic Times

Air India Express to post profit this year, too

The airline has had a fleet of 25 Boeing 737 New Generational planes for the last five years.
Mumbai: Air India Express, the regional international subsidiary of beleaguered state-run carrier Air India, is looking at its fourth straight year of net profit in 2018-19, bucking the trend at a time when most domestic airlines are grappling with losses and financial stress.

The budget airline is likely to post a net profit of about Rs 250 crore for the full year ending March 31 compared with Rs 262 crore in the previous year, chief executive officer K Shyam Sundar told ET in an interview. Revenue for the full year is estimated to come in at Rs 4,100 crore compared with Rs 3,612 crore in the previous year, he said.

Air India Express connects non-metro cities in India to neighbouring international destinations, especially in the Gulf region.

While the earnings have been a tad impacted by high fuel prices, they show a robust performance at a time when the industry is estimated to post operating losses of close to Rs 10,000 crore. Air India, like always, is expected to account for the biggest chunk of the losses. The airline posted a net loss of Rs 5,337 crore in FY18, down 18% year-on-year. An attempt to sell it failed last year. The government is now working on a fresh turnaround plan for the airline.

“We ought to be an example for the entire industry,” said Shyam Sundar. “We just increased our prices in line with fuel costs,” he added, explaining his airline’s profits. In a year when all airlines faced tremendous pressure on yields, Air India Express increased its revenue per average seat kilometre (RASK), a measure of per seat revenue per kilometre, by 15% to just below Rs 4.

The airline has had a fleet of 25 Boeing 737 New Generational planes for the last five years. Shyam Sundar said that has to change.

As part of Air India’s original turnaround plan, prepared by SBI Capital Markets in 2011, Air India Express was expected to have 36 planes by 2016-17. That fleet enhancement is yet to happen.

The airline has recently got an in-principal approval for inducting new planes and has to submit a final fleet-enhancement proposal to a government sub-committee. It aims to induct Boeing 737 Max planes, the upgraded, fuel-efficient version of the aircraft it currently flies. The new planes also have a longer range and will give it access to destinations beyond its current 5-hour stage-lengths.

AI Express operates 90 daily flights on 60 routes and aims to increase it to 130 daily flights on 90 routes—a 50% enhancement in operations. The airline has already shortlisted the 30 routes, many of which are not serviced by any other airline, and will submit the list in the same proposal as the one for fleet-enhancement.
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