Air India, owned by the Tata Group, reportedly recorded impairments of around ₹7,000 crore in FY23 due to issues with its aircraft, engines, and its subsidiary AirAsia India.

What Happened? However, losses decreased, and the carrier achieved positive earnings before interest, taxes, depreciation, amortisation, and restructuring or rent costs (EBITDAR) at the operating level, sources told the Economic Times. The net loss for the year was slightly over ₹2,500 crore – a significant improvement compared to a ₹9,556 crore loss in FY22.

Air India absorbed a large part of the impairments related to AirAsia India, with AirAsia Bhd, its former joint venture partner, covering the remaining losses. Despite these write-offs, Air India’s financials in the fiscal year ending in March remained robust, thanks to the new management’s focus on operational efficiencies and cost savings, the sources told the business daily.

See Also: Jindal Steel And Power Promoters Talk Big Raise, Consider Delisting: Report

Impairment costs of over ₹1,500 crore were attributed to AirAsia India, while around ₹5,000 crore were due to Air India’s outdated planes and engines.

Since Tata Group assumed control of Air India after its privatization in January 2022, the conglomerate has been working on consolidating its aviation units. Air India Express will merge with AirAsia India, while Vistara will merge with Air India. The restructuring efforts have yielded positive results, as reflected in the reduction of losses, the sources added.

The company plans to auction off or scrap many grounded aircraft while prioritizing safety, airline executives told ET. They added that Air India was focused on modernizing its aircraft and systems to ensure operational efficiency and maintain safety standards. The airline has reportedly allocated $400 million (₹3,300 crore) to revive and refurbish old aircraft, which are not currently generating any revenue.

The airline has reportedly seen a 25% increase in unit revenue and a 5% growth in load factor since its privatisation. Despite charging higher fares, Air India has successfully filled its aircraft, resulting in significant revenue improvement, one source said. They added that since privatization, the airline now generates ₹100 crore per day, compared to ₹70 crore per day previously, even with reduced capacity.

Read Next: What Is Air India’s Share Price And How To Buy