NEW DELHI: Seven years after the merger of erstwhile Indian Airlines and Air India was announced, the national carrier drew some criticism last week for celebrating ‘Air India day’ on August 27 – the day in 2007 when the merger process formally began.The criticism was over alleged waste of a large amount of money when the airline is bleeding — a charge the management has vehemently denied. While the issue is still being debated in the media, a look at Air India’s progress in the last two years shows that the airline has surely done some things right.Air India continues to operate under losses and ended FY14 with net losses, but it reported EBIDTA positive for the second consecutive fiscal in FY14 at over Rs 700 crore, a significant increase from Rs 19 crore in the previous fiscal.That means the airline is on the right path to achieve its target of becoming fully operationally profitable by FY17.The merged Air India was reeling under huge losses since 2007 and was knocking at the government’s door every now and then for equity infusion to pay salaries and convince vendors to give more time for payment of their dues.In April 2012, the government approved a turnaround plan (TAP) entailing an equity infusion of more than Rs 30,000 crore into the airline by 2020, if it meets certain milestones. So far, Air India seems to be on target. It is flying its planes with around 80% of its seats full and is also achieving the on-time performance of over 70% required in the plan.Air India chairman and managing director Rohit Nandan, who took over at a time when the airline was losing around Rs 7,000 crore annually, credits it to fund availability from the government and employees’ support.“Things started moving in the right direction only after the airline decided to act tough on striking airline pilots and the approval of the TAP, providing us the financia l support,” he said. “Money in our accounts ensured that the employees are paid and all our vendors are paid, which ensured that our operations are not impacted. Our action against striking pilots sent a message of management, who mean business,” Nandan told ET.Disciplined operations not just got the airline passengers but also fetched it an entry into Star Alliance, the world’s largest airline alliance. Airline sources say that the chance of an entry into the alliance was almost over around July 2012 due to a 58-day strike by the pilots of Air India’s wide-bodied planes that operated in the international sector.The Air India management, however, persisted with their request and entered the alliance exactly two years later in 2014. Entry into an alliance not just gives Air India passenger a huge network of 27 large airlines but also provides the airline committed passengers flying to India, adding to its bottom line.Two other major concerns were rationalisation of pay packages and promotions of the erstwhile Air India and Indian Airlines and curtailing the number of loss-making routes.Air India has been able to rationalise promotions of employees and as a result about 2,200 employees in the airline were given promotions but not salary hikes. “My promotions were due for the last so many years.It’s good that I got it but what is the point of giving it without any pay hike,” said an employee, who was promoted as an assistant general manager. Senior airline officials agree that employees have lost due to the delays in the implementation of the merger.“Mistakes committed in the past cannot be corrected but we are going to ensure that the employees get their due,” said an official, adding that issues related to their salaries will be addressed to an extent. While the employee issue were being handles by the personnel department, the commercial department was busy finding ways to bring down the loss-making routes.In August 2012, an audit by the ministry had found that 13 long-haul international routes accounted for about 80% of the cash losses suffered by the national carrier on long-haul routes during 2011-12. The airline was not being able to meet cash cost on three international and five domestic routes. About 60 international routes were meeting the cost of jet fuel but not the total cost.Many of these loss-making routes were either discontinued or the aircraft was changed to Boeing 787 Dreamliner. The airline has also started flights on various international destinations like Australia, Paris and Moscow with Dreamliners.“A lot of these new routes are not making money now, but they will soon start making money and Star Alliance’s partnership will also help in making them profitable,” said an Air India official. Nandan credits the turnaround of the airline to employees and a decision to hold open houses with employees initially – a first by any Air India CMD.“Open houses were an important landmark in improvement of morale and confidence of employees and their trust in the management. We empowered them to work like professionals and ensured their optimum utilisation by giving them freedom to work with only the interest of company at heart,” he said.“One of the decisions that paid us well was to hire director-personnel from outside. An outsider does not come with any bias either for the Indian Airlines or the Air India system and takes an objective view on the complex HR matters. This has gone a long way in resolving our long-pending HR issues,” Nandan said.Air India may have shown improvements in operations but analysts ET got in touch with believe that the airline needs to improve a lot to taste success.“Air India is still not out of the woods. The airline, with all the improvements, still is not in top 5 in terms of market share or even ontime performance,” said a former Air India official, who did not want to be identified.“They are adding international flights because they are getting Dreamlin-ers. This is not the time to add flights but to consolidate. The airline still requires a lot of improvement,” the person added.Nandan agreed that the airline has failed to achieve the asset monetisation target. “While the performance of Air India has been satisfactory on a lot of accounts, we have not been able to move even a bit on asset monetisation due to various reasons that were not under our control. We need to work towards that,” he said.According to the turnaround package, Air India needs to raise Rs 5,000 crore through sale and leasing of assets, which would be used for repayment of loans.Reducing debt is crucial for the airline that has an interest payment outlay of Rs 3,700 crore annually.