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Our Bureau

Mumbai, Nov. 24 Air India suffered a net loss of Rs 447.93 crore in 2006-07 mainly on account of higher operating costs and lower revenues. The airline’s board, which met here on Saturday, approved the accounts, a spokesperson for Air India said.

The airline had a net profit of Rs 16.29 crore in the previous year.

A senior airline official said that while the fuel cost, which accounted for about 35 per cent of the operating cost, increased by Rs 386 crore (12.5 per cent), the revenues fell by Rs 329 crore. In addition to this, the airline had an outgo of Rs 425 crore on account of payment of wage arrears.

The interest costs on working capital alone increased by Rs 155 crore to Rs 239 crore. In addition to this, the airline had to pay Rs 200 crore on long-term borrowings made to fund its fleet acquisition.

The official said the airline’s board on Saturday approved a proposal to convert part of the floating rate loan of $1.8 billion to fixed rate if the Libor comes down to 4.25-4.5 per cent range. This is part of several measures worked out to bring down the operating costs, he said.

This and other measures being proposed by the management are likely to bring down the operating cost by 3.5 per cent in the current year.

The public sector domestic carrier, Indian, is also said to have suffered a loss of Rs 275 crore last year. Both airlines have been merged and are now operating under the holding company National Aviation Company Ltd.

The airline is expected to report higher losses, if the current trend is any indication, an aviation analyst said. For the first eight months, it is reported to have suffered a loss of Rs 1,000 crore, as against the projected loss of Rs 224 crore.

Admitting that the losses are higher than projected, the official said all of these are not cash losses, but on account on higher depreciation.

The airline’s liquidity ratio has improved from 1.28 to 2.30 (The ratio represents the airline’s ability to meet the current liabilities from its cash and near cash assets.)

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