Costly fuel to crimp Air India Express FY18 net to under Rs 200 crore


Mumbai, Feb 4: Air India Express, the international low-cost arm of the flag carrier, may see a plunge in profit in fiscal 2018 at around Rs 200 crore, down from Rs 297 crore booked in the previous year, driven down by rising fuel bills and a higher payout to the parent Air India. The Kochi-headquartered Air India Express operates 555 flights a week, with a fleet of 23 Boeing 737 planes. It plans to induct two more such aircraft planes by August-September, according to a senior official. The airline will also be the first to operate to and fro from the upcoming Kannur international airport in its home state Kerala where it deploys over 65 per cent of its capacity.
“This time around I expect the bottomline to print in at around Rs 200 crore,” K Shyam Sundar, the chief executive officer at the airline, said here over the weekend without ascribing a reason. In fact, reflecting the fuel prices, in the last year also, its profit was lower than the previous year. After the first Rs 100 crore profit in FY15, its profit soared to Rs 361.7 crore in FY16 but came down to Rs 296.7 crore in FY7. But it can be noted that all the airlines have had an easy life last fiscal as crude oil hovered $35-40 a barrel throughout the year, but the same is trending at $70 and the average for this year could be around $60 a barrel. Which is an almost 50 per cent spike over the last year’s average. Airlines across the world, barring of course those in the Gulf nations, burn almost half their cash on fuel alone.
In Indian context, since petroleum products are out of GST, it varies from a low 4 per cent in states like Telangana to an absurd 34 per cent in Maharashtra. Air India Express, which flies to the Middle-East (West Asia) and Southeast Asian destinations, booked its first profit in FY15 with Rs 100 crore after it was set up a decade ago in April 2005 on the back of a 25 per cent plunge in crude prices in the year. Sundar said he expects the load (PLF) to increase by 150 bps next fiscal over the present 78.5 per cent, as he also expects the aircraft utilisation levels to go up to 6-7 per cent over 14 hrs from 13.25 hrs with the introduction of the two new 737 NGs planes. On the volume side, Sundar expects to ferry 4.5 million next fiscal year. In FY17, it carried 3.4 million passengers. He didn’t offer a number for this year. Sundar said AI Express will be the first airline to operate from the greenfield airport in Kannur, northern Kerala.
The fourth international airport in the tiny state is scheduled for commissioning this June, behind more than a year.