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| AI revenue share from low-cost arm likely to be halved after March |
| Mihir Mishra / New Delhi Feb 06, 2012, 00:45 IST |
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 Cash-strapped Air India’s trouble is set to increase. AI Express, its low-cost arm which presently shares 25 per cent of its revenue with the parent, will share only 12.5 per cent from 2012-13.
“That is a part of the turnaround plan (of AI). This will improve our financials and our losses will be cut by half, as our losses are primarily because of the revenue share with Air India,” said an AI Express official, who did not want to be identified.
AI Express is estimated to share 430 crore with AI for the current financial year, on revenue of Rs 1,700 crore. Its losses this year are of the same amount as what it gives AI. The parent company earns revenue of Rs 8,000 crore annually and losses on operations are Rs 500 crore per month. AI Express has accumulated losses of Rs 1,105 crore and debt of Rs 3,687 crore, comprising Rs 2,387 crore long-term, for aircraft acquisition, and Rs 1,300 crore of short-term loans. It has an equity base of Rs 30 crore and operates 21 medium-haul Boeing 737-800 aircraft. AI operates 110 aircraft of all kinds.
The turnaround plan’s details are being discussed by a Group of Ministers and includes equity infusion by the government. It also talks of carving out ground handling and engineering subsidiaries from AI. These units will look for business from outside and provide services to AI at cheaper rates. The GH subsidiary will take 7,465 people and another 10,481 people will be shifted to the engineering subsidiary. The move will shift a wage bill of Rs 931 crore to the engineering wing and Rs 600 crore to the GH wing. At present, the annual wage bill of AI is Rs 3,100 crore, with the employee strength being 31,000.
AI’s accumulated losses are Rs 20,000 crore and debt is Rs 43,000 crore. The airline is working on loan restructuring plans with 26 lender-banks.
The latte are restructuring Rs 18,000 crore of the Rs 24,000 crore of short-term debts, most probably into non-convertible debentures.
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