Air India

Air India is the flag carrier airline of India. It is part of the government of
India owned Air India Limited (AIL). The airline operates a fleet of Airbus
and Boeing aircraft serving Asia, Europe and North America. Its corporate
office is located at the Air India Building at Nariman Point in South
Mumbai. Air India has two major domestic hubs at Indira Gandhi
International Airport and ChhatrapatiShivaji International Airport. An
international hub at Dubai International Airport is currently being planned.
Air India has the fourth largest share in India's domestic air travel market,
behind Jet Airways, IndiGo and SpiceJet, as of May 2012. Following its
merger with Indian Airlines, Air India has faced multiple problems,
including escalating financial losses, discontent amongst employees, and
poor customer service. Between September 2007 and May 2011, Air
India's domestic market share declined from 19.2% to 14%, primarily due
to stiff competition from private Indian carriers. In August 2011, Air India's
invitation to join Star Alliance was suspended due to its failure to meet the
minimum standards for the membership. In October 2011, talks between
the airline and Star Alliance have resumed. In April 2012, the Indian
government granted another bailout package to Air India, including Rs300
billion ($5.8 billion) of subsidies.

History

Tata Sons, a division of Tata Sons Ltd. (now Tata Group) was founded by J.
R. D. Tata in 1932.
The aviator NevillVintcent had an idea to run mail flights from Bombay
and Colombo that connected with the Imperial Airways flights from the
United Kingdom. He found a supporter for his plans from J. R. D. Tata of
the Tata Iron and Steel Company. After three years of negotiations
Vintcent and Tata won a contract to carry the mail in April 1932 and in July
1932 the Aviation Department of Tata Sons was formed. On 15 October
1932, J.R.D. Tata flew a single-engined De Havilland Puss Moth carrying air
mail (postal mail of Imperial Airways) from Karachi's Drigh Road
Aerodrome to Bombay's Juhu Airstrip via Ahmedabad. The aircraft
continued to Madras via Bellary piloted by Vintcent.
Tata Airlines initially consisted of one Puss Moth aircraft, one Leopard
Moth, one palm-thatched shed, one whole time pilot assisted by Tata and
Vintcent, one part-time engineer and two apprentice-mechanics.
Initial service included weekly airmail service with a Puss Moth aircraft
between Karachi and Madras via Ahmedabad and Bombay, covering over
1,300 miles. In its very first year of operation, Tata Airlines flew 160,000
miles, carrying 155 passengers and 10.71 ton of mail. In the next few
years, Tata Airlines continued to rely for its revenue on the mail contract
with the Government of India for carriage of surcharged mail, including a
considerable quantity of overseas mail brought to Karachi by Imperial
Airways. The same year, Tata Airlines launched its longest domestic flight -
Bombay to Trivandrum with a six-seater Miles Merlin.
In 1938 it was re-christened as Tata Air Services and later same year was
renamed as Tata Airlines. By this time Delhi and Colombo were also
serviced.

Post-war expansion
Following the end of World War II, regular commercial service was restored
in India and Tata Airlines became a public limited company on 29 July
1946 under the name Air India. In 1948, after the independence of India,
the Government of India, with an option to purchase an additional 2%,
acquired 49% of the airline. In return, the airline was granted status to
operate international services from India as the designated flag carrier
under the name Air India International. On 8 June 1948, a Lockheed
Constellation L-749A named Malabar Princess (registered VT-CQP) took off
from Bombay bound for London Heathrow via Cairo and Geneva. This
marked the airline's first long-haul international flight, soon followed by
service in 1950 to Nairobi via Aden.
On 25 August 1953, the Government of India exercised its option to
purchase a majority stake in the carrier and Air India International Limited
was born as one of the fruits of the Air Corporations Act that nationalized
the air transportation industry. At the same time all domestic services
were transferred to Indian Airlines (now renamed as Indian). In 1954, the
airline took delivery of its first L-1049 Super Constellations and
inaugurated services to Bangkok, Hong Kong, Tokyo and Singapore.

The jet age

Air India International entered the jet age in 1960 when its first Boeing
707-420, named Gauri Shankar (registered VT-DJJ), was delivered. Jet
services to New York City via London were inaugurated that same year on
14 May 1960. On 8 June 1962, the airline's name was officially truncated
to Air India. On 11 June 1962, Air India became the world's first all-jet
airline.
In 1971, the airline took delivery of its first Boeing 747-200B named
Emperor Ashoka (registered VT-EBD). This coincided with the introduction
of the 'Palace In The Sky' livery and branding. A feature of this livery is the
paintwork around each aircraft window, in the cusped arch style of
windows in Indian palaces. In 1986 Air India took delivery of the Airbus
A310-300; the airline is the largest operator of this type in passenger
service. In 1988, Air India took delivery of two Boeing 747-300Ms in mixed
passenger-cargo configuration.
Early 1990s

In 1993, Air India took delivery of the flagship of its fleet when the first
Boeing 747-400 named Konark (registered VT-ESM) made history by
operating the first non-stop flight between New York City and Delhi. In
1994 the airline was registered as Air India Ltd. In 1996, the airline
inaugurated service to its second US gateway at O'Hare International
Airport in Chicago. In 1999, the airline opened its dedicated Terminal 2-C
at the renamed ChhatrapatiShivaji International Airport in Mumbai.

2000 Present
In 2000, Air India introduced services to Shanghai and to its third US
gateway at Newark Liberty International Airport in Newark. In May 2004,
Air India launched a wholly owned low cost airline called Air-India Express.
Air India Express connecting cities in India with the Middle East, Southeast
Asia and the Subcontinent. In 2004 Air India launched flights to its fourth
US gateway at Los Angeles International Airport in Los Angeles (which has
since been terminated) and expanded its international routes to include
flights from Ahmedabad, Amritsar, Bangalore and Hyderabad.
On 1 December 2009, Air India introduced services to its fifth US gateway
at Washington Dulles International Airport in Washington, D.C., accessed
via a stopover at JFK Airport in New York City. This service has been
terminated.

Re-privatisation plans
In 2001, the Government of India put forward plans on privatizing Air
India. One of the bids was by a consortium of Tata Group-Singapore
Airlines. However the re-privatisation plans were shelved after Singapore
Airlines pulled out and the global economy slumped.

Merger with Indian Airlines

In 2007, the Government of India announced that Air India would be
merged with Indian Airlines. As part of the merger process, a new
company called the National Aviation Company of India Limited (NACIL)
was established, into which both Air India (along with Air India Express)
and Indian Airlines (along with Alliance Air) will be merged.
On 27 February 2011, Air India and Indian Airlines merged along with their
subsidiaries to form Air India Limited.
Financial crisis
Around 2006-2007, the airlines began showing signs of financial distress.
The combined losses for Air India and Indian Airlines in 2006-07 were 770
crores (7.7 billion). After the merger of the airlines, this went up to 7,200
crores( 72 billion) by March 2009. Restructuring plans, which are still in
progress, followed this. In July 2009, SBI Capital Markets was appointed to
prepare a road map for the recovery of the airline. The carrier sold three
Airbus A300 and one Boeing 747-300M in March 2009 for $18.75 million to
survive the financial crunch.
As of March 2011, Air India has accumulated a debt of Rs. 42,570 crore
(approximately $10 billion) and an operating loss of Rs. 22,000 crore, and
is seeking Rs. 42,920 crore from the government. For the past three
months (June, July, August 2011), the carrier has been missing salary
payments and interest payments and Moodys Investor Service has
warned that missing payments by Air India to creditors, such as the State
Bank of India, will negatively affect the credit ratings of those banks. A
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; in addition it blamed on the ill timed merger with Indian Airlines
as well.
Due to high fuel and loan costs, Indian government has already pumped
32 billion rupees into Air India since April 2009 and in March 2012
government bailed out Air India Ltd. with a 67.5 billion rupees ($1.4
billion) which the amount almost double of the federal government has
spent on new hospitals over the past three years. Air India's corporate
headquarters is located at the Air India Building at Nariman Point in South
Mumbai. The airline moved there in 1970. The Air India Building also
serves as a regional office for Indian. As of 8 May 2012 the carrier invited
offers from banks to rise up $ 800 million via external commercial
borrowing and bridge financing. This was stated in the documents put up
on the carrier's website.

Delhi Hub
On 1 March 2009, Air India had made Frankfurt Airport at Frankfurt am
Main as its international hub for onward connections to United States from
India; however, the airline shut down the Frankfurt hub on 30 October
2010. However on 14 July 2010, Air India chief, ArvindJadhav announced
their intention to make the new terminal 3 at Delhi's Indira Gandhi
International Airport the hub for international and domestic operations
with the plans of starting new direct flights to Chicago and Toronto and
also taking almost all international long haul flights away from its former
Primary hub at Mumbai's ChhatrapatiShivaji International Airport due to
lack of space. This would also provide greater convenience for transit
passengers who before had to transfer between the international and
domestic terminals which were located on completely different sides of
the airport. They will now be able to catch their connecting flights within
the same terminal.

Return to profitability plans

The new Chairman and Managing director wants to change the order of
some of the 111 planes ordered in 2006 to get narrow-body aircraft
instead of the wide-body aircraft. On May 4, 2012, the airline was fined
$80,000 by the U.S Transportation Department for failing to post customer
service and tarmac delay contingency plans on its website and adequately
inform passengers about its optional fees. On May 8, 2012 about 100
pilots went on medical leave as a mark of protest while their talks with the
management were still on. Later, the same day it sacked ten agitating
pilots and de-recognized their union after 160 pilots failed to join duty by
the given deadline. On the 15th of May, the Union Civil Aviation Minister
Ajit Singh stated that the Government was giving Air India one last chance
and that it must perform in order to qualify for a bailout. On May 26, 2012
Aviation minister Ajit Singh announced that he would go ahead and hire
new pilots if the strike did not end soon. While, AI management gave an
assurance to Delhi High Court that it would look into the hardships of the
pilots sympathetically,the striking pilots have decided to end the 58 day
old strike immediately. Due to pilots' strike Air India suffered a loss of 500
crore (US$90.5 million) in 45 days. Eventually, following the intervention
of the Delhi High Court, the pilots called off their 58 day strike on 4 July
2012.

Criticism and controversy

State ownership

Air India today still remains as a state-owned company through Air India
Limited. However, government ownership of the airline has subsequently
led to multiple problems, such as enormous market share losses, declining
profits, and escalating labor disputes. Historically, there have been
numerous attempts to privatize Air India in hopes of a better future, but
government interference has since prevented this goal from being
achieved. Furthermore, it is also believed that mismanagement and
corruption have impacted Air India's financial performance.

Customer service

A major complaint about Air India was its negative overall brand image
and reputation for poor customer service, and reviews about rude staff
and poor handling of delays and cancellations were reported. According to
Skytrax's website, passengers rate the airline's services an abysmal 4.1
out of 10, reflecting its services as inferior.

Star Alliance

In December 2007, Star Alliance invited Air India in an effort to expand its
presence in the Indian subcontinent. However, issues with technology and
software upgrades and the aftermath of its merger with Indian Airlines
have delayed its entry into the alliance for roughly three and a half years.
When the final deadline for joining came in July 2011, Air India's
application was suspended, and was told it failed to meet the minimum
criteria to join. In response, many of Air India's officials complained to Star
Alliance about the suspension of its application, claiming that they already
met all of the requirements. But in October of that same year, talks
between Air India and Star Alliance have resumed.

Corporate affairs and identity

Organization

Air India has three subsidiaries. Together Air India, Air India
Cargo, Air India Express and Air India Regional form the Air
India Limited.
The company's head office is in the Air India Building in
Nariman Point, Mumbai. The registered office is in the Airlines
House in New Delhi.

Subsidiaries
Air India Cargo
In 1954, Air India Cargo started its freighter operations with a
Douglas DC-3 Dakota aircraft, giving Air India the distinction of
being the first Asian airline to operate freighters. The airline
operates cargo flights to many destinations. The airline also has
ground truck-transportation arrangements on select
destinations.
A member of IATA, Air India carries all types of cargo including
dangerous goods (hazardous materials) and live animals,
provided such shipments are tendered according to IATA
Dangerous Goods Regulations and IATA Live Animals
Regulations.
At the warehouse in Mumbai, Air India has developed a system
of inventory management for cargo handling of import/export
functions. This takes care of the entire management of cargo,
supports Electronic Data Interface (EDI) messages with Indian
Customs and replaces to a great extent existing paper
correspondence between Customs, Airlines, and the custodians.
This also replaces manual handling and binning of cargo at the
warehouse in Mumbai by Air India.

Air India Express

Air India Express is the airline's low-cost subsidiary, which was
established in 2005 during the aviation boom in India. It
operates scheduled passenger services primarily to the Persian
Gulf and South East Asia. Air India Express is currently the only
airline in Air India Limited, which posts profits. It operates a
fleet of Next Generation Boeing 737-800 aircraft. Cochin
International Airport is the main hub of the airline from which it
has connections to almost all the Gulf countries.

Air India Regional

Air India Regional (formerly known as Alliance Air) serves
mainly on regional routes. Its main hub is Delhi's Indira Gandhi
International Airport.
Livery
19702007 livery
Air India's livery was mostly painted in red and white colours.
The bottoms of the aircraft remain metal and unpainted but the
upper portion is given a white background along with the
airline's name written in red. The name is in Hindi on one side
and in English on the other. The painted on red palace style
carvings on the outside of the windows refer to their slogan
"your palace in the sky" which is written on the back of the
aircraft. Near the noses of Air India aircraft, the air plane is
given a name. Most planes are named after powerful Indian
kings or landmarks. Finally, the tail is mostly red with again, the
carrier's name written in Hindi on one side and English on the
other.
In 1989, to supplement its "Flying Palace" livery, Air India
introduced a new livery that was mostly white with a golden
spinning wheel (as seen on the flag of India) on a red tail. Only
applied to around a half of Air India's fleet, the new livery did
not succeed, as the Indian flying public complained about the
phasing out of the classic colours. The livery was dropped after
two years and the old scheme was returned.

Pre-merger livery
On 15 May 2007, Air India refreshed its livery, making the
Rajasthani arches along the windows slightly smaller, extending
a stylisedcheatlinefrom the vertical tail of the aircraft to the
nose, and painting a small portion of the underbelly red.
Additionally, engine nacelles are now deep red, and a gold-
coloured version of the airline's stylized Konark trademark now
adorns both the vertical tail and engine nacelles.

Post-merger livery
On 22 May 2007, Air India and Indian unveiled their new livery.
The logo of the new airline is a Flying Swan with the Konark
Chakra placed inside it. The Flying Swan has been morphed
from Air Indias characteristic logo, The Centaur whereas the
Konark Chakra is reminiscent of Indians logo.
The new logo features prominently on the tail of the aircraft.
Individually the Konark Chakra also features on all the engines
of the aircraft. The choice of colours namely red for Flying
Swan and orange for Konark Chakra are meant to signify
vigour and advancement. Further the colours also have a
strong association with two carriers thereby retaining the
earlier imagery of traditional hospitality and service.
While the aircraft is ivory in colour, the base retains the red
streak of Air India. Running parallel to each other is the Orange
and Red speed lines from front door to the rear door, subtly
signifying the individual identities merged into one. The brand
name Air India runs across the tail of the aircraft in hindi.

EXHIBIT 1
Company >> Finance >> Financial
Overview
Air India Ltd

Industry :Transport - Airlines

(Rs in Crs)
 20080
3
Equity Paid Up 145
5813.1
Networth 3
24226.
Capital Employed 53
18654.
Gross Block 45
Net Working Capital ( Incl. Def. 2269.3
Tax) 4
8838.8
Current Assets ( Incl. Def. Tax) 8
Current Liabilities and Provisions ( 6569.5
Incl. Def. Tax) 4
Total Assets/Liabilities (excl Reval 30796.
& W.off) 07
13638.
Gross Sales 35
13638.
Net Sales 35
1619.1
Other Income 2
13638.
Value Of Output 35
13662.
Cost of Production 02
Selling Cost 803.8
-
1835.3
PBIDT 8
-
2536.6
PBDT 8
-
2597.0
PBIT 4
-
3298.3
PBT 4
-
2226.1
PAT 6
-
CP 1464.5
6623.1
Revenue earnings in forex 2
Revenue expenses in forex 8088.7
 1
Capital earnings in forex 0
Capital expenses in forex 0
Book Value (Unit Curr) 400.91
Market Capitalisation 0
CEPS (annualised) (Unit Curr) -101
EPS (annualised) (Unit Curr) 0
Dividend (annualised%) 0
Payout (%) 0
Cash Flow From Operating
Activities 0
Cash Flow From Investing
Activities 0
Cash Flow From Financing
Activities 0

Key Ratios
Debt-Equity Ratio
Long Term Debt-Equity Ratio 2.97
Current Ratio 1.15
Turnover Ratios
Fixed Assets Ratio 0.73
Inventory Ratio 13.62
Debtors Ratio 5.22
Interest Cover Ratio -4.37
PBIDTM (%) -16.9
PBITM (%) -22.49
PBDTM (%) -22.04
CPM (%) -14.18
APATM (%) -19.77
ROCE (%) 0
RONW (%) 0
Debtors Velocity (Days) 0
Creditors Velocity (Days) 0
Assets Utilisation Ratio (times)
Value of Output/Total Assets
Value of Output/Gross Block 0
Intranet Version of Capitaline
Coraporate Databases