Air India to Import Aircraft Turbine Fuel Direct

Mumbai: In a move that will improve the finances of Air India, the airline's board approved direct import of Aviation Turbine Fuel, an official said. For this, AI would soon appoint a service provider who would source the supply as well as provide the necessary infrastructure for ATF storage and distribution for in-plane fueling. At its meeting, the board took into account the escalating fuel costs which is likely to put an additional burden of 2,200 crore, with the estimated fuel bill for the year 2011-12 at 8,000 crore. As part of the risk management strategy, the board approved the hedging of fuel up to 20 percent of the total international uplifts and allotted specific amount in its budget. A risk management team comprising senior officials was also set up in order to continuously monitor and take positions in fuel hedging. The board also took on record the progress on the restructuring of the working capital into long-term loans under which 11,000 crore of working capital is proposed to be converted into long term loans and 3,400 crore into cash credit facilities. The government will chip with support in respect of the non-convertible debentures of 7,400 crore. Despite the additional interest cost of 1,500 crore which eroded the profitability of AI, the airline is expecting an equity infusion shortly during 2012-13 which would boost its operating and financial parameters besides giving comfort to the institutional lenders in the form of better net worth. Meanwhile, AI's operating and financial performance till February 2012 notched a continuous increase as compared to last year, the official said. The passenger revenue, which was 718 crore in February 2011, went up to 949 crore in February 2012, registering a 32.20 percent increase. The number of passenger for the same period went up from 0.962 million to 1.091 million, an improvement of 13.40 percent. This has enthused the AI to end the current fiscal with higher than budgeted performance in the revenues. The board also approved the revenue expenditure budget estimates and the capital budget for 2012-13, the latter was in tune with the annual plan outlay of the company, involving a capital outlay of more than 400 crore on non-aircraft projects. The bridge financing of US $ 195 million for the purchase of two B-787 Dreamline aircraft, to be raised from Standard Chartered bank, was also approved and the deal is expected to be wrapped up soon.