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Air India losses for FY2011 estimated at USD1.6bn

4-Aug-2011 10:24 AM

India's Civil Aviation Minister Vayalar Ravi, in a written reply to Parliament, stated Air India is estimated to report a loss before tax of INR69.94 billion (USD1.6 billion) in FY2011 (Reuters/PTI/IANS/The Hindu, 03-Jul-2011). Mr Ravi blamed rising fuel costs, high interest rates, rising yields and a high employee-aircraft ratio (263 employees per aircraft) for the estimated provisional result. "The turnaround plan submitted by Air India envisages substantial equity support," he said. A panel of ministers has been holding meetings to discuss infusing equity into the loss-making carrier and is reportedly in the process of preparing a note to the federal cabinet. "The financial position of Air India is being intensively monitored by the government. The turnaround plan and with financial restructuring plan of Air India is presently being examined," Mr Ravi said. Air India is also in talks with banks to restructure USD4 billion of working capital debt and is implementing a turnaround plan which would focus on a hub-and-spoke route model, reduce costs by redeploying staff and divest non-core real estate. The airline has failed to post a profit since merging with Indian Airlines in 2007 and relies on government cash infusions to survive.