National carrier Air India reported improved results for the second year in a row by increasing its operating profit and narrowing net loss for the financial year 2016-17. The company is a top candidate for privatisation, though the contours are yet to be finalised by the Modi government.
News agency PTI reported that Air India's net loss declined 5 percent to Rs 3,643 crore from Rs 3,836 crore in 2015-16 while operating profit more than doubled to Rs 300 crore in 2016-17 from Rs 105 crore came in the preceding fiscal, referring to a statement made by Jayant Sinha, minister of state for civil aviation, in the Rajya Sabha on Tuesday.
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Revenues for 2016-17 came in at Rs 22,146 crore, up 8 percent from Rs 20,524 crore in the preceding financial year, the PTI added.
The airline has a market share of about 14 percent in India's domestic air traffic that is dominated by budget carrier IndiGo with a share of 40 percent. Other carriers in the domestic space include full-service carrier Jet Airways and low-cost carriers SpiceJet, GoAir and AirAsia India.
Though there was speculation of the carrier's debt being in excess of Rs 50,000 crore, the minister told the Rajya Sabha that the debt stood at Rs 48,876.81 crore while conceding debt servicing was hitting its financial performance. "Air India is facing financial pressure and earning less profit due to high debt burden as an offshoot of past accumulated losses. The debt servicing is at around Rs 6,000 crore per annum," the PTI quoted Sinha as saying.
The carrier is making efforts to reduce the interest burden and thereby improve its performance. "Air India has been in consultation with various banks so that the interest costs can come down substantially in the coming years to improve its profits," Sinha told the Upper House on Tuesday.
Meanwhile, Interglobe Aviation, which owns low-cost carrier IndiGo, is planning to sell shares so as to reduce promoter's stake in the venture, according to a report in the Mint. The company's board is expected to meet on July 31 to take a final decision.
IndiGo's promoters are Rahul Bhatia and Rakesh Gangwal and Interglobe Aviation was listed on stock exchanges in November 2015, the business daily said. The company is the only carrier to have evinced interest in buying out Air India.
At around 12.20 pm, Interglobe Aviation shares were trading 1.72 percent lower at Rs 1,253 apiece while SpiceJet was up 1.08 percent higher at Rs 117 on the Bombay Stock Exchange.
