Reason for air-india crisis

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Reason for air-india crisis

  1. 1. History• Founder • Air transport was born in India on February 18, 1911 Mr. J R D Tata
  2. 2. Company Perspectives• Air-India is Indias finest flying Ambassador. The do to excel and the enthusiasm which characterized Air-Indias first flight way back on October 15, 1932 is quintessential even today--thanks to eighteen thousand Air Indians who have kept alive the tradition of flying high!
  3. 3. HISTORY OF AIR INDIAIn 1932, In 1960,Air India began its journey under Air India flew its first the aegis of Tata Airlines, a international flight to New division of Tata Sons Ltd. (now Tata Group). Following World York via London. In 1962, War II in 1946, regular Air India became the commercial service was worlds first all-jet airline restored in India and Tata and its name was officially Airlines became a public limited truncated to Air India A company under the name of Air India. Under the Air Corporations Act of 1953, the Government nationalised the air transportation industry and Air India International Limited was born.
  4. 4. Company Perspectives• Air-India is Indias finest flying Ambassador. The do to excel and the enthusiasm which characterized Air-Indias first flight way back on October 15, 1932 is quintessential even today--thanks to eighteen thousand Air Indians who have kept alive the tradition of flying high!
  5. 5. In 2007,• India and Indian Airlines merged into one airline, with its name remaining Air India. Air India is now a part of Star Alliance and is supposed to be joined by Alliance Air and Air India Express soon.
  6. 6. Reason for Air India Crisis •The real reasons behind the present financial crisis are the interest burden , repayment and overhead expenses. P&l Balance sheet
  7. 7. According to Times of India newspaper till 1 week agoAnnual Losses of Rs. 5000 cr and totalaccumulated loss of Rs 16000 cr.It compensation Rs. 1400 cr to state own airportoperator.Air India has 10% of total global airlines revenuelosses
  8. 8. Air India is facing a tight financial situation and is intalks with leaders to restructure its debt of Rs. 40k cr .As of March 2011, Air India has accumulated a debt ofRs. 42,570 cr and an operating loss of Rs. 22,000 cr,and is seeking Rs. 42,920 cr from the government. Forthe past three months (June, July, August, 2011), thecarrier has been missing salary payments and interestpaymentsA report by the Comptroller and Auditor General (CAG)blamed the decision to buy 111 new planes as one ofthe major causes of the debt troubles in Air India.
  9. 9. The causes Bad management and unreliably policieshas brought Air India crisis levelComplete lack of ownership Lake of responsibility for results andfailures. Deeply ingrained corruption in all levels.
  10. 10. Unionized strike with political financial supporthas physical disability of Air India.The Top Boss of Air India not having decisionpower as there will be ministry interventions whichleads to lake of cohesiveness, focused, proactiveand long term business planning.
  11. 11. Government Turnaround Strategy of Air India Bail Out plan for Rs.15000 cr – Rs. 5000 cr. as equity infusion and the balance as soft loan with long term repayment period and subsidized interest rate. Improved defined work methods which could lead to substantial cost reductions
  12. 12. Revival Strategies The cash strapped Air India revival strategies can becomprehensively drawn out on short term , medium term andlong term basis. The Area of Strategic Interest should be onfollowing business. The most important aspect to addresswould be teamwork and response spontaneity. Air India the international brand 1. Full service high value travel 2. Business Class travel Air India – the national brand 1. Full service high value travel 2. Business Class travel The Cargo Services
  13. 13. Revival StrategiesShort term strategy would in evaluating and reorganizing in otherstrategy area and existing operation which are to be completed in 3 to6 months timeMedium term strategy would be in International , National and Cargoservice with an comprehensive analysis of segmentation of market tobe executed in 6 to 12 months Long term strategy would be online of global perspective to theaviation business and developing further future strategy to beconsidered for 12 months and beyond periods.The main values for revival strategies should be agility , team workand response spontaneity to services.
  14. 14. Thank You

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