AI to directly import aviation turbine fuel

The carrier is expecting an equity infusion in 2012-13

March 27, 2012 09:33 pm | Updated November 17, 2021 12:10 am IST - NEW DELHI

Ailing national carrier Air India has decided to go in for direct import of Aviation Turbine Fuel (ATF) in a bid to curb the escalating cost.

The AI board, which approved the direct import on Tuesday, also gave a go-ahead to the state-owned carrier to soon appoint a service provider who would source the supply as well as provide the necessary infrastructure for storage and distribution of the same for in-plane fuelling.

AI expects to end the year with a higher-than-budgeted performance in the revenues. However, the escalating cost in fuel is likely to set it back by an additional Rs. 2,200 crore and its fuel bill is estimated to be around Rs. 8,000 crore for 2011-12. Added to this, the additional interest cost of Rs.1,500 crore eroded the profitability of the airline.

The board also took on record the progress on the restructuring of the working capital into long-term loans whereby Rs.11,000 crore worth of working capital is proposed to be converted into long-term loans and Rs. 3,400 crore into cash credit facilities.

The government would provide support in respect of the non-convertible debentures of Rs. 7,400 crore.

AI 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.

Meanwhile, AI's operating and financial performance up to February this year registered a continuous increase compared to last year. The passenger revenue during February 2012 went up to Rs. 949 crore from Rs. 718 crore in February 2011, registering a 32.2 per cent increase.

As part of the risk management strategy, the board approved the hedging of fuel up to 20 per cent of the total international uplifts and allotted a specific amount in its budget. A risk management team of senior officials was set up in order to continuously monitor and take positions on fuel hedging.

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