Nov 11, 2009
The Air India Board, which met in Chennai today, approved the annual accounts for the fiscal 2008-09. The accounts reflecting a post-tax loss of Rs.5,548.26 crore was considered by the Board in the background of a global economic meltdown, resulting in fewer passengers travelling and falling yields.
The loss comes in the wake of IATA forecast which had predicted that the losses in the aviation industry for the year 2008 would be around USD 16.8 billion, followed by a loss of USD 11 billion for the year 2009 due to weak revenue environment and increase in operating costs, like fuel and other charges.
In line with the market trend, total revenue of Air India declined from Rs.15252 crore in 2007-08 to Rs.13479 crore in 2008-09, due to global recession, fall in load factors and passenger yields. As a consequence, the passenger load factor declined from 63.8 per cent in 2007-08 to 59.5 per cent in 2008-09 and the number of passengers travelling on Air India flights declined from 13.21 million in 2007-08 to 10.36 million in 2008-09.
The other significant factors contributing to the loss were:
- Substantial increase in fuel costs during 2008-09 when ATF prices touched a record $ 147 per barrel;
- Increase in depreciation costs due to induction of new fleet;
- Increase in interest on aircraft loans and borrowings;
- Loss on foreign exchange due to a depreciating rupee.
The company has in the past one year taken a series of measures to enhance revenue and reduce costs, which include inter alia, restructuring/withdrawal of certain loss-making routes, return of leased aircraft, rationalization of wage structure, aggressive sales and marketing initiatives to improve yields and load factors, phasing out of old fleet and induction of new aircraft on various domestic and international routes, leveraging its potential in engineering and cargo for enhanced revenue. These measures together with the pick up in demand in the domestic and international traffic, are likely to result in improvement in the operating performance for the year 2009-10, subject to fuel prices remaining stable during the rest of the year.
Air India has also identified Booz & Allen to look at costs across the board for effecting savings.
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