Air India Case Study

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PROBLEM IDENTIFICATION The main reason that separates Air India from other loss incurring carriers, both private and state-owned is the reason behind those losses. No doubt that AI was hit by expanding fuel bills and falling demand, but the crisis at Air India is self-made to a large extent. Financial Distress- Air-India lost almost $171 million in the initial years beginning with 1994-95. Management reduced fares drastically & provided 2-for-1 discounts. In the crisis times, company also planned to raise cash (though it had reserves of more than $110 million) by selling its Hotel Corporation of India subsidiary, worth $220 million, as well as some older Boeing, valued at $60 million. Still, the company owed $900 million on new aircraft purchases.…show more content…
This is the carrier's first operating profit in a decade. At a net level though the carrier is making a huge loss as its interest and maintenance cost remain high. It deducted 25% of the salary of its employees. All types of programs, ceremonies and functions were declined. In September, 2014, it opened a trust called “Real Estate Investment Trust” which managed all the static property of Air India. Fall in oil prices have helped. But, the recovery is much higher than what has been the gain from oil prices. The financial growth trend can be observed through the following…show more content…
As a first step, he has set up a five-member committee to rationalize Air India's routes. Of its 370 daily flights, only nine were profitable, according to a statement by Mahesh Sharma, in Parliament in November. Of these, 6 are on domestic routes, while three are on overseas sectors. Lohani, being an engineer himself, has conducted regular inspections of the maintenance, repair and operations facilities of the airline since taking charge. When the smoke incident took place at the Delhi airport, he immediately drove to the site to examine the situation. It is learnt that Lohani has expressed faith in the airline's safety measures. He is believed to have told the civil aviation ministry that there are 280 A320 aircraft of various international airlines in service which are older than 20 years, so Air India is not an outlier. He is believed to have said that Air India follows a strict regime of following the approved maintenance programme for A320 aircraft. This is how the turnaround happened and the communication of the above noted instances helped in regaining trust of

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