Finally, there is hope on the horizon for India’s perennially loss-making airline, Air India.
On March 15, the Narendra Modi government announced that the state-owned airline is set to make an operating profit during the 2016 fiscal—the first time in nine years. Often accused of wasting taxpayers’ money, the improved financial performance is expected to bring some respite from years of negative publicity.
Much of the turnaround may be attributed to plummeting oil prices which hit a record low in the past year. Crude oil prices account for more than 50% of the operating cost of airlines in India.
“Air India is expected to earn an operating profit of Rs8 crore as compared to the operating loss of Rs2,636.18 crore in the previous year. This is the first time that the company is going to achieve operating profit since its merger in 2007-08,” India’s junior minister for aviation Mahesh Sharma said in parliament on March 15.
In what is now believed to have been an ill-timed move, the government had fused Air India—an airline flying internationally—with domestic carrier Indian Airlines in 2007, creating a bigger entity, the National Aviation Company of India Ltd (NACIL).
Both Air India and Indian Airlines were making losses at that time, bleeding Rs541 crore and Rs240 crore, respectively, in 2007.
To Read the News in Full 16/03/16 Manu Balachandran/Quartz India
On March 15, the Narendra Modi government announced that the state-owned airline is set to make an operating profit during the 2016 fiscal—the first time in nine years. Often accused of wasting taxpayers’ money, the improved financial performance is expected to bring some respite from years of negative publicity.
Much of the turnaround may be attributed to plummeting oil prices which hit a record low in the past year. Crude oil prices account for more than 50% of the operating cost of airlines in India.
“Air India is expected to earn an operating profit of Rs8 crore as compared to the operating loss of Rs2,636.18 crore in the previous year. This is the first time that the company is going to achieve operating profit since its merger in 2007-08,” India’s junior minister for aviation Mahesh Sharma said in parliament on March 15.
In what is now believed to have been an ill-timed move, the government had fused Air India—an airline flying internationally—with domestic carrier Indian Airlines in 2007, creating a bigger entity, the National Aviation Company of India Ltd (NACIL).
Both Air India and Indian Airlines were making losses at that time, bleeding Rs541 crore and Rs240 crore, respectively, in 2007.
To Read the News in Full 16/03/16 Manu Balachandran/Quartz India
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