Air India incurred write-offs amounting to an estimated INR 70bn during the FY 2022-23. The airline attributes this to issues faulty aircraft and engines, as well as losses incurred by low-cost airline AirAsia India, Economic Times reports.
As per sources, Air India Group achieved EBITDAR positivity and neared breakeven after meeting lease rental obligations in the first year.
AirAsia India accounted for most of the losses, with the net loss for the year estimated to be slightly over INR 25bn. In FY 2021-22 the airline had incurred a loss amounting to INR 195.56 bn. This year’s loss is seen as a relative improvement over last year’s finance.
The write-offs were primarily attributed to Air India's impaired aircraft and engines, with AirAsia Bhd, taking responsibility for the remaining losses incurred by AirAsia India. Despite the write-offs, Air India's financials for the year ending in March were deemed healthy by executives. The new management has been focusing on operational efficiencies and cost savings, resulting in positive outcomes.
AirAsia India accounted for an impairment cost of over INR 15bn, while the faulty planes and engines of Air India contributed to an estimated INR 5 bn in write-offs.
The executive mentioned in the report that there are plans to auction off or scrap numerous aircraft, prioritising safety. They emphasised Air India's dedication to modernising aircraft and systems while maintaining a strong focus on safety, even as cost reduction is achieved through technology-driven modernisation.
The airline currently faces the challenge of lease rentals for several grounded aircraft that do not generate revenue. To address this, a budget of $400 million has been allocated for the revitalisation and refurbishment of old aircraft.
On a standalone basis, the airline reported a net loss of INR 95.56bn and net revenue of INR 19.81bn in FY22. In FY21, it recorded a net loss of INR 70.17bn with revenue of INR 121.04bn.