Search the Internet          Tips  Sites: Finance, Investment

A-I poised to make net profit of Rs 230 million

In a financial turnaround after a five-year gap, Air-India is poised to make a net profit of about Rs 230 million in the first five months of the current fiscal, according to Union Civil Aviation Minister, Sharad Yadav.

This would be against the budgeted net profit of Rs 220 million for the entire financial year, he told reporters in Bangalore on Tuesday.

Yadav attributed the turnaround, among others, to the addition of half a million seats per year through dry lease of four A-310 aircraft without recruiting any additional manpower, and to the introduction of competitive fares on important routes.

He said bringing down the losses of AI was a "strenuous task" and it was possible only by close monitoring.

Measures including plugging of pilferage, loopholes, cutting expenditure and rationalising routes were taken.

Yadav said unwise corporate decisions in the past by the A-I management in wet leasing of Caribjet aircraft without an exit clause led the airline to incur a liability of Rs 1.03 billion plus interest on this account.

It had further led to a liability of Rs 1.01 billion as income tax, he said.

Due to the wet leasing of Caribjet aircraft between 1994 and 1997, A-I incurred an operational loss of Rs 2.55 billion and another Rs 899 million between 1995 and 1998 on account of wet leasing the Air Club aircraft.

On account of wet leasing of aircraft alone, A-I had incurred a cash loss of Rs 3.45 billion between 1994 and 1998, he said.

Yadav said A-I planned to take two more aircraft on dry lease to tap profitable routes in the Gulf and in the Middle-East to further improve profitability.

Tell us what you think of this report