ESTIMATES PUT AIR INDIA LOSS AT RS. 7,000 CRORE – THAT’S MORE THAN $1.5 BILLION

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By admin June 14, 2011 13:35

ESTIMATES PUT AIR INDIA LOSS AT RS. 7,000 CRORE – THAT’S MORE THAN $1.5 BILLION

For the year ending March 30, 2011, Air India is estimated to have posted a record loss of Rs. 7,000 crore, which is more than $1.5 billion. The news means the beleaguered carrier’s turnaround plan is not working.

Published in India newspaper Mint – who received the figures from an internal assessment of the airline – Air India was reported to have made a loss after tax of Rs. 6,994 crore, wider than the previous year’s Rs. 5,552.44 crore and falling short of targets that were set last year. Net loss before tax is estimated at Rs. 7,195.75 crore compared with Rs. 5,633.56 crore in the previous year. The final numbers will be announced by the airline over the next few months.

This fiscal year was supposed to form the base year for the revenue and other projections in Air India’s revival plan, which was vetted by consulting firm Deloitte Touche Tohmatsu India Pvt. in March. The plan predicts a turnaround for the airline in 2014-15, but based on these dismal figures this may need to be revived. Especially since all other listed Indian airlines have improved their financial results during the fiscal year.

The sheer scale of the losses is unlikely to be matched by any other global carrier, even in this environment of high fuel prices. Airlines other than Air India have learned to earn incremental revenue from baggage and other fees to boost coffers, while they also do not hesitate to cut non-profit making routes. According to one analyst, Air India is not allowed to make such choices.

An unnamed Air Indian official speaking to Mint, blamed steeper oil prices and restricted government support for the losses. An official spokesperson however claimed there was good news in that the airline had  “achieved targets, except last quarter due to increase in fuel, interest cost, depreciation, wage, etc”, reports the Indian newspaper.

Air India is so racked with debt that analysts do not now expect it to survive, even with further government bailouts.

The turnaround plan were prepared on a total revenue of Rs. 15,927 crore and total expenses of Rs. 14,923 crore for 2010-11  – the estimated results show the carrier will fall short on both counts. Given such dire circumstances, Air India will also likely need to defer its 787 order.

admin
By admin June 14, 2011 13:35
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