Air India expected to lose $1.06 billion in current financial year
MUMBAI - National carrier Air India is expected to incur a net loss for the third straight year as the worldwide economic slowdown has hit demand for air travel.
The airline is estimated to post a loss of up to 50 billion rupees ($1.06 billion) in the current financial year through March 31, Jitendra Bhargava, Air India's executive director for corporate communications, told Dow Jones Newswires by phone.
Air India had posted a net loss of 50 billion rupees in the past year because of a slowdown in global air travel and a surge in jet fuel prices. In the year before that, the air line posted a net loss of 4.48 billion rupees - its first loss after five consecutive years of reporting profits.
"Our actual losses may be less than what has been estimated now," Mr. Bhargava said. "...remember we are undertaking various cost-cutting steps."
Earlier in the day, the Mint newspaper said, citing an unnamed official at the civil aviation ministry, that Air India posted a loss of 20 billion rupees in the first half of the current fiscal year and is heading for a loss of 50 billion rupees for the full year.
Air India had previously sought financial assistance from the government in the form of equity and soft loans to run its operations and buy planes from Boeing Co. and Airbus. In return, the government had asked its management to prepare a complete turnaround plan for the airline.
The plan that the carrier prepared seeks a reduction in salary costs, hiving off of non-core businesses, restructuring debt and introduction of a domestic low-cost service over 18-36 months.
The company recently said it estimates to save up to 13 billion rupees via various cost-cutting measures by March 31.
This includes reducing manpower costs by four billion rupees, aircraft-maintenance expenses by three billion rupees and fuel costs by 1 billion rupees. The remaining amount will be saved through renegotiating contracts at airports, eliminating wasteful expenditure and a system restructuring.
The state-run airline carried 4.7 million passengers during the January-August period, giving it a nearly 17% share of India's local aviation market, data from the ministry showed.
Airlines in India carried a total of 28.4 million domestic passengers during the period, a 1.8% decline from a year earlier.