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JANUARY 2015

Week 4

Airline News

Air India back to profit?

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January 20th 2015

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Air India, which made the headlines last month when it transpired that only nine of its 370 daily departures are profitable, reported a surprise net profit of 146 million rupees (US$2.36 million) for the month of December, driven by a low crude oil price and growth in both passenger and cargo revenue, official sources have told The Times of India. Read More »

While the numbers were encouraging, analysts cautioned that December is traditionally a peak month for most carriers, and as such Air India’s results are less telling as a predictor for 2015. Mahesh Sharma, India’s minister of state for civil aviation, said in Delhi last month the airline lost 75.6 billion rupees ($1.22 billion) in 2011-12; 54.9 billion in 2012-13 and 53.9 billion in 2013-14.

In other news, Air India has kicked off another price war when it released all-inclusive domestic fares for as low as 1,557 rupees ($25). The sale was quickly followed by similar offers from rival, Jet Airways. Mumbai-based Jet Airways’ main promoter and chairman, Naresh Goyal, has meanwhile pledged his entire 51% shareholding in the carrier, valued at over 26 billion rupees, to state-run Punjab National Bank with a “non-disposal undertaking”. The reason for the pledging of shares was not disclosed.

UAE-based Etihad Airways holds a 24% stake in Jet as a strategic partner with the remaining shares owned by institutional and retail investors. As of September 30, Jet sat on a loan balance of 98 billion rupees, almost twice its valuation, though down 7% from 106 billion six months earlier.

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