Air India saves Rs 400cr through restructuring

Excerpts from Reporter's Diary on CNBC-TV18 Watch the full show » RELATED NEWS Saving the Maharaja: Arvind Jadhav's plan for Air India Nifty BSE | NSE 10/02/12 Are Mutual Funds betting on Nifty?

Air India has saved Rs 400 crore in six months of restructuring, reports CNBC-TV18, quoting sources. Full international bookings for December-January are also helping the beleaguered public carrier.

Route rationalisation, aircraft leasing, inventory management, fuel saving contracts are also helping, sources say. The renegotiation of catering contracts is also helping the airliner.

Air India's load factor has gone up to 72%. It is also likely to receive Rs 800 crore equity infusion by January, which is to be used for fleet replacement.

Meanwhile, Aviation Minister Praful Patel says the Group of Ministers has decided on financial package for Air India. He added that the airliner has taken initiatives to turnaround the company. Air India's cost reduction and revenue enhancement target is Rs 1,500 crore and Rs 1,200 crore, respectively.

Here is a verbatim transcript of Mehak Kasbekar's comments on CNBC-TV18. Also watch the accompanying video.
 
Sources say that infact of all the hiccups the airline has managed to save about Rs 400 crore in these last six months of restructuring, the turnaround plan was announced six months ago.

The route rationalization, leasing out of aircrafts, entry management, fuel saving contracts, renegotiating catering contracts has helped the airline to reduce costs upto Rs 400 crore. The biggest cost reduction that they are expecting which will come in till January is about Rs 300 crore in just human resources. That remains to be seen whether they can cut down this Rs 300 crore cost.

The other things we've picked up is that international bookings for December and January for the airline are full. Money is coming in from that as well has helped the airline save these costs and the load factors are up to atleast 72%.

Also, Air India is scheduled to get its first tranche of equity infusion in January which will be around Rs 800 crore. What we have picked up from sources is that the first tranche of equity will be used for fleet replacement. Atleast Rs 10,000 crore will be used for fleet replacement. That is the first thing they will do with the equity infusion coming in. But definitely the restructuring plan is helping Air India.