-No need for fof further capital injection as airline is flush with funds, says Vinod Kannan; carrier plans to expand to Bali, add flights to Europe from Mumbai
-Air India and its former joint venture partner AirAsia Bhd shared the cost of writing off AirAsia India, with Air India accounting for a significant proportion of the write-off
Mumbai, NFAPost: The merger between Vistara and Air India is on track and the airline expects to receive all regulatory approvals by April ’24, said Vinod Kannan, CEO at Vistara.
“We (the airline) are on track to receive regulatory approvals from Competition Commission of India (CCI), National Company Law Tribunal (NCLT), among others,” Kannan added.
The airline recorded its first ever operating profit in Q3 of FY23. “The airline has sufficient capital cashflow and there is no requirement for further capital injection,” he added.
The company said that it plans to expand to destinations such as Bali, and add flights to Europe from Mumbai. “We are consistently operating well on long-haul routes,” he added.
In November last year, Tata Sons and Singapore Airlines (SIA) announced the merger of Air India and Vistara to meet up with the growing domestic demand in commerical aviation sector and expand market share.
The merger is under scrutiny of the Competition Commission of India (CCI).
The CCI had issued a show-cause notice to Air India on its proposed merger with Vistara over concerns about competition in the aviation sector, Business Standard reported in June.
Currently, Tata Sons wholly own Air India, whereas its sister airline Vistara is a 51:49 joint venture between Tata Sons and Singapore Airlines (SIA).
SIA and Tata Sons had stated to the anti-trust body in April that the merger would not change or adversely affect competition in the country.
SIA will invest Rs 2,059 crore in the expanded share capital of Air India for a 25.1 per cent stake whereas Tata Sons would own 74.9 per cent as per deal.
The airline recorded an 8.1 per cent share in June in the domestic aviation market.
Air India writes off Rs 7,000 crore but turns Ebitdar positive in FY23
Due to impairments caused by faulty aircraft and engines, as well as its low-cost airline AirAsia India, carrier Air India wrote off an estimated Rs 7,000 crore in the financial year 2022-23 (FY23), according to a report by the Economic Times (ET).
However, the airline’s losses decreased and it was Ebitdar (earnings before interest, taxes, depreciation, and amortisation and restructuring or rent costs) positive or, profitable at an operating level, according to executives.
A person was quoted as saying that the net loss was slightly over Rs 2,500 crore. This compares with a loss of Rs 9,556 crore in FY22, the person said. Air India and its former joint venture partner AirAsia Bhd shared the cost of writing off AirAsia India, with Air India accounting for a significant proportion of the write-off.
Air India’s financials in the year ended March were healthy except for the write-offs, executives said. An impairment cost of more than Rs 1,500 crore is estimated against AirAsia India and around Rs 5,000 crore due to Air India’s old planes and engines.
The Tata Group acquired Air India in January 2022 and is currently consolidating its aviation units by merging Air India Express with AirAsia India and Vistara with Air India.
An executive was quoted as saying that Air India needs to be restructured wholly and the amount of loss shows that the plan is yielding results.
Officials stated that a positive Ebitdar means that the firm is profitable at an operating level, excluding expenses such as taxes, rent and restructuring costs. Air India has kept a steady focus on both costs as well as safety, they added.
In the financial year 2021-22 (FY22), the airline registered a net loss of Rs 9,556.5 crore on net revenue of Rs 19,815.9 crore. In FY21, it had posted a net loss of Rs 7,017.4 crore on revenue of Rs 12,104 crore. Revenue figures for FY23 weren’t immediately available.
