India’s embattled national carrier Air India reported better traffic and revenue numbers for February and proceeded to set up direct import of aviation fuel.
The passenger revenue during February 2012 went up 32% to Rs. 949 crores from a year ago. Total number of passengers who flew on Air India also went up 13.4% to to 1.091 million.
As a result, the airline expects to have a higher revenue that it had anticipated, the company said in a statement.
However, that will not help the company’s profit, going by the numbers. Its fuel bill has been inflated by Rs 2,200 crore this year to Rs 8,000 crore due to the rise in oil prices, it said.
To cope, the company’s board approved the direct import of Aviation Turbine Fuel (ATF). It would shortly appoint a service provider, that would source the supply as well as provide the necessary infrastructure for storage and distribution, it said.
Direct import of fuel would be cheaper for airlines such as Air India as they don’t have to pay local taxes, such as sales tax.
The company’s board als approved the hedging of fuel up to 20% of the total international uplifts. Hedging allows the company to get into long term supply contracts at current prices.
Air India also said it is expecting an equity infusion shortly in the financial year 2012-13, which would “not only improve its operating and financial parameters but would also give considerable comfort to the institutional lenders in the form of better net worth.”
It also said the temporary (bridge) financing of the two 787 Dreamliner aircraft has also been approved by the company’s board of directors. The loan of 195 million from Standard Chartered Bank, India is expected to be closed soon, it said.