Air India Express may post first profit this fiscal year: CEO K Shyam Sundar

MUMBAI: Air India Express, the national carrier’s low-cost unit, may swing to it’s first net profit this fiscal year, on cost savings, better market conditions and reworked contracts, its chief executive K Shyam Sundar said on Wednesday. The airline started operations in 2004.

“We are likely to post a net profit of about Rs 100 crore on revenue of Rs 2,600 crore,” Shyam Sundar said at an event in Mumbai. He said the airline had posted a loss of over Rs 200 crore last year. He didn’t mention last fiscal’s revenues.

AI Express is headquartered in Kochi and flies primarily to gulf destinations, largely cashing in on the labour traffic flying those routes. It has nine domestic destinations in its network.

Shyam Sundar said one of the reasons for profitability is the airline’s reduced fleet size — phasing out all four leased aircraft from its fleet to save on lease rentals. However, it didn’t cut flights or drop destinations from its network.

The airline currently has a fleet of 17 Boeing 737-800 New Generation planes and operates 55 flights a day.

“We achieved that by increasing average aircraft utilisation (time an aircraft flies during the day) by 22% to 11.3 hours,” said Shyam Sundar.

The carrier also tweaked its network, dropping domestic leg flights and increased the average duration of flights. So, from a Kochi-Trivandrum-Muscat flight, Trivandrum was dropped as the flight wasn’t making money.

“We also increased average stage length from 3 hours to 3 and half hours. This means on a daily basis there are lesser landings and takeoffs. This saves on maintenance costs,” he added. He said maintenance costs constitute 10% of total, without giving absolute numbers for either.

AI Express has cash reserves worth Rs 130 crore and overdraft ofRs 1,300 crore.

The airline maintains a lean staff of 750 people and they are all on contract, he said, another reason for healthier margins than its parent.

Air India has posted constant losses since 2007, one of the biggest reasons being staff costs.

The airline currently has a workforce of over 23,000 employees.

AI Express aims to increase its fleet size to 25 in the next few months and plans to start flights from Delhi to Kuala Lumpur and Doha.