Business Daily from THE HINDU group of publications
Tuesday, Nov 28, 2006
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Business Daily from THE HINDU group of publications Tuesday, Nov 28, 2006 ePaper |
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Financial Performance Corporate Results - Airlines Indian net profit down on higher fuel prices Ashwini Phadnis
Growth measures Keeping costs under control Making more efficient use of capacity Outsourcing of services and redeployment of staff
New Delhi , Nov. 27 The global increase in prices of aviation turbine fuel (ATF) as also pressure on yields due to competition saw Indian reporting a lower net profit of Rs 49.5 crore during 2005-06 as against Rs 65.61 crore during the previous year. This is the third successive year that the airline has reported a net profit. The airline board that met here on Monday approved the annual accounts for 2005-06. Sources indicated that the airline profitability would have been much higher if ATF prices, which account for 30-35 per cent of operating costs, had not moved northward during the year. Besides, Indian, like many other full service airlines, saw its yields coming under pressure mainly on account of low-cost airlines offering low-priced tickets. The airline reported an operating revenue of Rs 5,770 crore during 2005-06 up from Rs 5,330 crore reported during the previous year. Indian reported an increase in passenger carriage at 7.86 million from 7.13 million.
Growth measures
In the recent past, Indian has been taking a number of initiatives including keeping costs under control, making more efficient use of its capacity, outsourcing of services and redeployment of staff to consolidate its position in the domestic market. Besides, the airline has been looking at adding capacity not only through induction of the Airbus that it has purchased, but also through a leasing plan. The airline recently also signed a memorandum of understanding with the French company, Snecma, for setting up a maintenance, repair and overhaul (MRO) facility. The airline is likely to hold a 49 per cent stake in the $30-million project.
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