The debt-ridden national carrier Air India has decided not to serve a full meal on its flights which are of less than 90 minutes.
Passengers travelling on such flights will now have to make do with snacks. The implementation of the move will help the airline save Rs 20 crore annually.
The company has also decided to go in for sale-and-lease-back mechanism for the yet-to-be-inducted Boeing 787 plane. The airline has also planned to lease out excess capacity. All these decisions were taken at the board meeting here.
A statement issued after the meeting said, “The Board has approved the issue of request for proposal for 787 aircraft under sale-and-lease back mechanism pending a final clearance from the Government.” The company has ordered 27 Boeing 787 aircraft.
Although the first of the aircraft was to have been delivered next month, after a delay of almost two years, there is no confirmation on the date when the Boeing aircraft will join the AI fleet. Considering the precarious financial health of the company, it is being debated whether the order should be reworked or not. Now, the Cabinet will take a call on this issue.
The board also decided that the company may lease out excess capacity of two 747-400 aircraft. It may also lease out some 777-200 LR aircraft but only after the induction of 787.
The Board noted that passenger revenue did increase by Rs 1,294 crore but higher expenditure on fuel, wage and interest negated the impact on profitability. Fuel bill saw a jump of 18 per cent to Rs 1,097 crore while wage bill increased by Rs 295 crore. Due to an increase in borrowing and hike in rates, interest cost went up by Rs 860 crore. The company has to provide Rs 300 crore on account of depreciation.
It is in the process of implementing the financial restructuring plan, which would provide a saving of Rs 1,000 crore per annum by way of interest cost alone.