NACIL to get first instalment of Government funding in Jan-2010

Direct News Source

17-Nov-2009  National Aviation Company of India Limited (NACIL), in view of the improved passenger carriage in recent months, is trying to address the issues concerning the delayed payments of the Productivity Linked Incentives (PLI) to its employees. The delay has ranged from one to two months in the past. Efforts are being made to settle the PLI payment payable in October 2009 shortly, so that the PLI arrears are cleared till date and that future PLI payments are not in arrears for more than a month.

NACIL is also putting in place a payment plan to clear the arrears to various vendors in the light of improved booking position for December 2009, January and February 2010, which are regarded as good months for the airline industry.

The improved market environment has enabled NACIL to notch up impressive gains in domestic market share, according to the data released by the Directorate General of Civil Aviation. The airline’s domestic market share which was 16.6 per cent in August’09 rose to 17.5 per cent in September’09 and climbed to 18.6 per cent in October’09.

The airline’s seat factor has also been showing significant improvement in the past three months. The seat factor has improved from 59.8 per cent in August’09, to 67.5 per cent in September’09 and 72.8 per cent in October’09.

NACIL flew a total of 7.7 lakh passengers on its domestic network during October’09, a gain of over 1.1 lakh passengers compared to October’08.

The enhanced carriage and higher load factor on account of improved on time performance and gradual deployment of more and more new aircraft on various sectors has enabled NACIL to achieve higher cash collections during this period. The enhanced revenues are, however, still not of the order which can help generate surplus after meeting all financial commitments. This is a ground reality that needs to be understood and appreciated by everyone.

The Group of Ministers has also recently assured support to the National Carrier in the form of equity infusion and the first installment of Rs. 400 Crore is expected by January 2010. Further installments would be tied up to the mile stones of savings effected on account of cost cutting exercise adopted by the national carrier at various levels. NACIL is simultaneously taking effective measures to enhance revenue to the extent feasible in today’s market environment. NACIL will also aggressively rationalize its fleet size and network besides pruning non-core activities in the coming months.

Whilst the airline is doing everything possible to tide over the financial crunch, NACIL, like other airlines worldwide, is expected to continue witnessing a strained cash flow due to a weak economic and revenue environment. The yields continue to be low due to the excess capacity both in the domestic and international markets and consequent low pricing by all carriers.

As per IATA’s forecast the revenue environment would return to the 2008 levels only by 2012. Amidst this situation the carrier is also trying to regulate its capacity in accordance with the requirement and has set specific targets for revenue enhancement in the various areas of its business.