AIR INDIA CRISIS

BYPINKAL PATEL

ANKIT CHAUHAN

History

• Founder• Air transport

was born in India on February 18, 1911

Mr. J R D Tata

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!

HISTORY OF AIR INDIAIn 1932, Air India began its journey under

the aegis of Tata Airlines, a division of Tata Sons Ltd. (now Tata Group). Following World War II in 1946, regular commercial service was restored in India and Tata Airlines became a public limited company under the name of Air India. Under the Air Corporations Act of 1953, the Government nationalised the air transportation industry and Air India International Limited was born.

In 1960,

Air India flew its first international flight to New York via London. In 1962, Air India became the world's first all-jet airline and its name was officially truncated to Air India

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!

In 2007,

• 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.

REASON FOR AIR INDIA CRISIS

Reason for Air India Crisis

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

P & l Balance sheet

According to Times of India newspaper till 1 week ago

Annual Losses of Rs. 5000 cr and total

accumulated loss of Rs 16000 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 2011, Air India has accumulated a debt of

Rs. 42,570 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, 2011), 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.15000 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

Revival Strategies

The cash strapped Air India revival strategies can be comprehensively

drawn out on short term , medium term and long term basis. The Area of

Strategic Interest should be on following business. The most important

aspect to address would be teamwork and response spontaneity.

Air India the international brand

1. Full service high value travel

2. Business Class travel

Air India – the national brand

1. Full service high value travel

2. Business Class travel

The Cargo Services

Revival Strategies Short term strategy would in evaluating and reorganizing in other strategy area and existing operation which are to be completed in 3 to 6 months timeMedium term strategy would be in International , National and Cargo service with an comprehensive analysis of segmentation of market to be executed in 6 to 12 months

Long term strategy would be online of global perspective to the aviation business and developing further future strategy to be considered for 12 months and beyond periods.

The main values for revival strategies should be agility , team work and response spontaneity to services.

Thank You