Air India Express, the low-cost subsidiary of Air India airline, hopes to post a net profit of approximately Rs 200 crore in FY 2016-2017. The airline reportedly posted a net loss of Rs 60 crore in the previous year.
Due to a fall in Aviation Turbine Fuel prices and higher seat occupancy of about 83 percent, K Shyam Sundar, CEO of Air India Express, said the company expects to post a net profit of Rs 200-250 crore during the financial year 2016-2017, Mint reported.
In order to improve profitability by saving interest costs, the company plans to convert its rupee loans into dollar loans.
The Kochi-headquartered airline will be able to get dollar loans at about three percent rate, if it manages to raise funds via ECB, otherwise the company will get rupee loans at a rate of 13 percent. The company is currently in talks with bankers and banks such as State Bank of India.
"To complement the profitability efforts, we are planning to convert our rupee loans of Rs 1, 500 crore into dollar loans via external commercial borrowings (ECB)," Sundar was quoted as saying by the publication.
According to reports, at present, the airline operates around 60 percent of its flights out of Kerala.
"Gradually, Air India Express will shed its image, as the airline is launching several flights from other Indian states. Shortly, the flight ratio will come to 50:50 for Kerala flights and services from other cities," Sundar was quoted as saying by Mint.
Air India Express is planning to increase its current fleet of Boeing 737 jets and will add six more planes by the end of the year.
Due to falling jet fuel prices, Indian aviation carriers have removed fuel surcharge as a separate charge from airfares and instead charge a base fare. Air India on Monday decided to have an all-inclusive base fare starting from 1 April, 2016.
On the other hand, parent company Air India said it found it tough to hire pilots to meet its expansion plans, but in a bid to curb pilots from leaving the company soon after training, the company will start charging a surety bond of Rs 1 crore from new pilots.