The Hindu Business Line : IA clocks Rs 65.61-cr net profit in '04-05

THE State-owned Indian Airlines has reported a net profit of Rs 65.61 crore for 2004-05, up from Rs 44.17 crore reported during the previous year. The bottom line performance for 2004-05 has been the best for the airline since 1987-88.

According to the audited financial results for fiscal 2004-05, which were cleared by its board at a meeting here late last week, the airlines' total revenues stood at Rs 5,362.57 crore, up from Rs 4,677.50 crore recorded during the previous year.

In March this year, the board of directors had estimated that the airline would register a net profit of Rs 17.5 crore in 2004-05 as against a budgeted net loss of Rs 24.75 crore. Indian Airlines is planning to tap the capital market with an initial public offering (IPO) in early 2006. A part of the proceeds from the IPO is likely to be used to finance the acquisition of 43-Airbus aircraft.

Officials attributed the better financial results to not only an increase in total revenues of the airlines but also the various cost-cutting methods that were adopted which helped save Rs 76.59 crore.

Among the cost-cutting measures adopted include saving on the insurance payment for the fleet, outgo on account of interest and financing charges and cutting on staff expenses. The airline has been able to achieve a net profit despite the prices of Aviation Turbine Fuel (ATF) going up by nearly 33 per cent during 2004-05. Generally, ATF costs contribute almost 30 per cent of the cost of most airlines.

The airline carried 7.1 million passengers during 2004-05 up from 5.9 million passengers carried during the previous year. Similarly, the airlines' occupancy rate increased to 65 per cent from 60 per cent recorded during the previous year.