Tata aviation companies report higher loss of Rs 15,532 crore in FY23
Tata Group’s aviation companies, namely Air India, Air Asia, and Tata SIA Airlines, have reported a higher loss of Rs. 15,532 crore for the financial year ended in March 2023, compared to the Rs. 13,767 crore loss reported by the airlines in 2021-22.
In 2022, Tata Group acquired Air India for Rs. 2,700 crore in cash and assumed liabilities of Rs. 15,986 crore from the Indian government. Tata had previously established Tata SIA Airlines in collaboration with Singapore Airlines and AirAsia India with Air Asia from Malaysia as joint venture partners. However, since their inception, these two airlines have not turned a profit and have reported losses for 2022-23 (FY23). Tata Group is now consolidating all airlines under the Air India brand.
Air India Express, the low-cost carrier of Air India, managed to make a profit of Rs. 116 crore in FY23 on revenues of Rs. 5,668 crore.
The airline business has become a cash-guzzler for the holding company, following massive losses in the telecommunications (telecom) sector over the past seven years.
Tata Sons not only repaid bank loans worth Rs. 60,000 crore from Tata Teleservices in the past, but it also had to buy back shares from its former partner, DoCoMo, after losing a protracted legal battle overseas. The telecom company also carries an additional liability of Rs. 6,546 crore in terms of adjusted gross revenue dues to the Indian government until March this year.
In its annual report for FY23, Tata Sons stated that from the date of acquisition until March 2022, Air India contributed Rs. 5,657.71 crore in revenue and incurred a loss of Rs. 397.25 crore before tax from ongoing operations.
Had the acquisition date marked the beginning of the annual reporting period for the year ended in March 2022, the contributed revenue would have amounted to Rs. 22,542 crore, and the loss before tax would have been Rs. 9,626 crore.
For the current reporting period, Air India has contributed Rs. 37,928 crore in revenue and incurred a loss before tax of Rs. 11,216 crore, the report revealed.
During the current year, Air India set aside Rs. 5,103 crore as a provision for the impairment of property, plant, and equipment, as well as right-of-use assets. Of this amount, Rs. 4,982 crore was included in the acquisition date’s fair value measurement and has thus been reversed in the consolidated financial statements.