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June 9, 2001
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Money > Business Headlines > Report June 9, 2001 |
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A-I net worth plunges to Rs 3.50 billionPuja Mehra The Maharaja of Indian skies has lost much of his exuberance in the last six years with its net worth plunging by a fourth to Rs 3.50 billion in 2000-01 from an all-time high of Rs 14.35 billion in 1994-95. With stiff competition from international carriers, paucity of funds for crucial investments and plunging quality of service, Air-India is likely to end the current fiscal with zero if not negative cash flows, which might well erode its net worth, sources said. The carrier's expenditure in the current year is likely to shoot up with payments for five aircraft acquired on dry lease and more to be acquired shortly as also increased interest payments on debt to be raised for meeting the proposed voluntary retirement scheme. Revenue growth in the current fiscal is unlikely to be as high as the last fiscal since the carrier has started lending flying rights to international airlines for an assured annual payment. It recently lent the flying rights on the Hyderabad-Dubai route to Emirates for Rs 470 million per annum. Moreover, with ground handling services to be shared by five private companies, revenue from this account, which stood at Rs 3.10 billion in the last fiscal, will also drop substantially. All this has compelled Tata Sons, one of the two bidders for the 40 per cent government stake in Air-India, to prepare a rehabilitation plan to be submitted in support of its bid. Air-India has however, attributed the losses and the dwindling market share to the rising fuel and employee costs. The lack of a level playing field vis-a-vis international airlines on fuel costs has only exacerbated the situation for the carrier. A senior executive of Air-India said, "The carrier has fared rather well during 2000-01, cutting its net losses from Rs 380 million in 1999-2000 to Rs 285 million last year. Total revenues have also grown by 11 per cent from Rs 46.62 billion to Rs 51.80 million during the period. We would have definitely posted profits this year had the fuel prices not risen so sharply." Powered by YOU MAY ALSO WANT TO READ:
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