National carrier Air India reported a net loss of Rs 447 crore for the year 2006-07 hit hard by rising fuel costs, payment of wage arrears and declining yields.
The airline reported a total income of Rs 9,683 crore for the year, while expenditures were much higher at Rs 10,130 crore.
Air India’s board, which met on Saturday, has devised drastic measures to minimise the losses. A senior official, who refused to be named, said that ATF prices that were at all-time highs and intense competition by domestic and international carriers had hit the airline hard. <b1>
Senior officials said that the fuel bill was higher at Rs 386 crore and there was a revenue loss of Rs 330 crore due to diminishing yields in a competitive environment.
Wage arrears were to the tune of Rs 425 crore and interest outgo towards long-term capital stood at Rs 200 crore. Similarly, the interest outgo on working capital was Rs 239 crore.
During the year, the airline spent Rs 50 crore towards improving passenger amenities and leasing of aircraft, which, sources said was due to increased lease rentals.
“It was a bad year for the entire airline industry and how could we have been insulated? We also had to commit huge amounts to buy planes from Boeing. We are now taking drastic steps improve revenues. With the merger, we hope to post profits in two years,” said an official on condition of anonymity.
“Our liquidity ratio is still pretty good at 2.2:1. We have liquidity of Rs 2,200 crore,” the official added. “We are stringing together a series of cost-cutting measures which we feel will enhance our revenue by 3-4 per cent and thereby contribute to our bottomline,” a senior airline official said.
A few measures have already been adopted following the merger of Air India and Indian Airlines into Indian.