Company Perspectives

• Air-India is India's finest flying Ambassador. The do to excel and the enthusiasm which characterized Air-India's first flight way back on October 15, 1932 is quintessential even today--thanks to eighteen thousand Air Indians who have kept alive the tradition of flying high!

Obviously, opening the skies was not the reason!

In 2007,In 2007,

• Air India and Indian Airlines merged into one airline, with its name remaining Air India. Air India is now a part of Star Alliance and is supposed to be joined by Alliance Air and Air India Express soon.

• This is fact was the starting point of all the trouble

Reason for Air India Crisis

The real reasons behind the present financial crisis are the interest burden , repayment and overhead expenses.

Problem Statement

Annual Losses of Rs. 7000 cr and total

accumulated loss of Rs 49000 cr.

It compensation Rs. 1400 cr to state own

airport operator.

Air India has 10% of total global airlines

revenue losses

Air India is facing a tight financial situation and is

in talks with leaders to restructure its debt of Rs.

40k cr.

As of March 2014, Air India has accumulated a

debt of Rs. 48,570 cr and an operating loss of Rs.

22,000 cr, and is seeking Rs. 42,920 cr from the

government. For the past three months (June, July,

August, 2013), the carrier has been missing salary

payments and interest paymentsA report by the Comptroller and Auditor General

(CAG) blamed the decision to buy 111 new planes as

one of the major causes of the debt troubles in Air

India.

The causes Bad management and unreliably policies has brought Air India crisis level

Complete lack of ownership

Lake of responsibility for results and failures.

Deeply ingrained corruption in all levels.

Unionized strike with political financial support has physical disability of Air India.

The Top Boss of Air India not having decision power as there will be ministry interventions which leads to lake of cohesiveness, focused, proactive and long term business planning.

Government Turnaround Strategy of Air India

Bail Out plan for Rs.30000 cr – Rs. 5000 cr. as equity infusion and the balance as soft loan with long term repayment period and subsidized interest rate.

Improved defined work methods which could lead to substantial cost reductions

Operational Improvement

• 13 Long haul international routes accounted for 80 percent of losses in the long haul routes

• Cash cost of 3 domestic and 5 international routes were not met

• 60 international routes meeting cost of jet fuel, but not total cost

Operational Improvement

• Three loss making long haul routes be discontinued, and 10 to be replaced by 787 dreamliners

• New destinations like Australia, Moscow and Paris started with dreamliners

• Reducing service time of the aircrafts high on agenda

Operational Improvement

• Re route traffic based on priorities of star alliance

• Make IT infrastructure foolproof

Personnel Policies

• Rationalize pay packages and promotions of all employees, regardless of their original employer- Be it Air India or Indian Airlines

• Hold Open House meetings with employees

Personnel Policies

• Act Tough on Striking pilots.

• Dispense the government approved funds so that resources are paid well and vendors cheques do not bounce

• In short, operations should not be affected

Asset Monetinisation

• Needs to fine tune asset monetinasation

• Target would be to sell or lease Rs 5000 Cr worth of assets in order to meet targets

• Amount to be used for repayment of loans

Marketing options

• Co Branded credit cards to be launched for this option

• Allow reward points to be directly brought from the website. Pricing to be done competitively

• Tier upgrades to be made more rigorous and benefits to be evenly spread out

Marketing options

• Direct booking of hotels to be made available from the company portal

• Applying for transit visas be made available from the website

• Prepaid option for cabs from major airports be made available from the portal

• Commercials must target every demography

Instead of focusing on our services

Thank

You