This document summarizes the history and financial troubles of Air India, India's national airline. It traces Air India from its origins in 1932 as Tata Airlines to its nationalization in 1953. In recent decades, Air India has faced significant losses, declining market share, and high debt levels due to factors such as unrealistic aircraft purchases, failed mergers, and leasing losses. The government is now seeking to privatize Air India to stem further losses and allow the airline to be turned around under private management as the aviation sector grows in India.

1. AIR INDIA
PATH TO TURNAROUND ITS FORTUNE

2. Journey from #1932
TATA AIRLINES
Renamed Air India in 1946
Air Corporation Act passed.
Air India Nationalized in
1953
AI become a member of the
Star Alliance in 2014

3. THE ENDGAME
 CAG hauls up AI & MoCA for reckless
purchase of 93 aircraft based on
unrealistic estimates of earning potential.
 It leads to major losses.

4. AIR INDIA IN TAILSPIN
0
2000
4000
6000
8000
Category 1
RupeesCrore(Loss)
Years
Chart Title
2011-12 2012-13 2013-14 2014-15 2015-16 2016-17

5. Snapshot of AI compares with Market
leader INDIGO
INDIGO (2016-17)
Revenue
50%
Expenditure
46%
Profi…
INDIGO
AIR INDIA (2016-17)
Revenue
43%
Expenditure
50%
Loss
7%
AIR INDIA

6. LOST OF THE MAHARAJAH
40%
18%
14%
13%
8%
7%
Market Share
Indigo Jet Airways AIR INDIA Spicejet Go Air Others

7. Air India/Indigo Fleet Strength
Year 2011-12
94 55
Year 2015-16
107 107

8. Staff Woes
0
5000
10000
15000
20000
25000
30000
2012 2014 2016 2017
26851
23259
20166 19149
45 46 47 48
Staff Strength/ Avg. Age
Staff Strength Avg. Age Column1

9. AIR INDIA SUBSIDIARIES
Air India Air Transport Services
Ltd.(AIATSL)
Staff: 11755
Net Profit(2016-17): Rs. 102 crore
Air India Charter Ltd.(AICL)
Staff: 1084
Net Profit(2016-17): Rs. 361 crore
Air India Engineering Services
Ltd.(AIESL)
Staff: 4605
Losses(2015-16): Rs. 558 crore
Airline Allied Services Ltd.(AASL)
Staff: 663
Losses(2016-17): Rs. 200 crore
Hotel Corp. of India Ltd.(HCL)
Staff: 854
Losses(2016-17): Rs. 17 crore

10. AIR INDIA: ASSETS & LIABILITIES
 Staff (As on March 31, 2017): 11,912
Regular
 Aircraft : 107
 Wage Bill : Rs. 2,400 crore
 ATF Bill : Rs. 5,745 crore
 Market Share : Down from 28% in 2005-06
to14% in 2016-17
 Total Debt : Rs. 52,000 crore
 Loans for Aircraft : Rs. 20,000 crore
 Working Capital Loan : Rs. 30,000 crore
 Debt-Service Burden : Rs. 6,500 crore
P.A.
 Equity infusion from Govt. : Rs. 2,500
crore P.A.
 Depreciation : Rs. 1,500 crore
 AI needs to further borrow : Rs. 2,500
crore P.A.

11. Properties of AIR INDIA
 In DELHI Air India have total of 140,881 sq. m. property.
 In NCR, GURGAON 420 sq. m.
 In MUMBAI Air India Building, Nariman Point 41,713 sq. m. leasehold asset & Building at old
airport, Kalina Santacruz 23,989 sq. m. owned.
 In CHENNAI 83,352 sq. m. owned.
 In HYDERABAD 80,937 sq. m. owned.

12. The Big Goofs Buying Spree
 Acquisition of 111 aircraft for Rs. 70k crore despite the airline’s poor financial
health.
 In December 2005, the Manmohan Singh government approved the purchase of 68
aircraft from Boeing. A year later, Indian Airlines signed up for 43 aircraft from
Airbus Group SE.
 The decision have come under the scrutiny of the CAG and CBI. The CBI’s FIRs in
May 2017 charged former aviation minister Praful Patel and unnamed officials
with ordering the purchases without transparency causing immense loss to the
exchequer.

13. Merger Mess
 The Air India-Indian Airlines merger in 2007 under the brand name Air India was
signed at leveraging synergies, but it only created another languishing entity.
 In 2002-03, the combined entity of Indian Airlines and Air India lost just Rs. 63
crore. Losses shot up to nearly Rs. 7000 crore in 2010-11.

14. Leasing Losses
 The CBI also raised charges of irregular leasing of aircraft by Air India without a
proper route study and marketing-pricing strategy.
 The CAG’s 2015 report pegged losses from leasing of aircraft as Rs. 405.8 crore
between March 2011 and May 2014.

15. Distress Sale
 A CAG report tabled in Parliament in March 2017 said Air India incurred loss of
over Rs. 671 crore by selling its five Boeing 777-200 long range aircraft to Etihad
below cost price.
 The losses would be higher if we add Rs. 324.6 crore paid as interest on loans to
procure these aircraft.
 Only 17 of the airline’s services recovered costs in 2015-16; 36 services ran into
losses.

16. With the sector booming and fuel prices
low, THE TIME IS RIGHT to sell the airline
 The civil aviation ministry sought the advice of NITI Aayog, the government
premier think-tank was clear: AI should be privatized.
 The government doesn’t want equity the more they keep, the more the value of AI
will be eroded.
 Air India’s destiny will shape the destiny of India’s aviation sector and, given its
consumer importance, size and geopolitical relevance, to be on a par with aviation
sectors in comparable countries such as China and the US.
 Privatizing Air India will REAFFIRM MODI’s POSITION as an economic reformer.

17. Investment Opportunity
 As we know that Air India’s asset has potential to arrange the deal.
 AI’s land and properties are in huge amount that attract the deal.
 As per the standard for single aircraft it takes 9 year to receive after making order
but AI have preponderance aircraft.
 Air India have the membership of Star Alliance which is complaisant for
privatization.
 The enormous flight connectivity of AI in domestic as well as international market
leads to get way for sale of the government stake.

18. PRESENTED BY
MOHIT S. JANE