Weighed down by surging jet fuel prices, Air-India's net profit plunged by a huge 82.54 per cent at Rs 16.29 crore (Rs 162.9 million) for the year 2005-06.

The net profit for the year 2004-05 was Rs 93.31 crore (Rs 933.1 million). Fuel constituted a third of the airline's total cost.

The fuel bill of Air-India, including its subsidiary, which runs low-cost carrier Air-India Express, shot up by 43.62 per cent during the last financial year at Rs 3,134 crore (Rs 31.34 billion) against Rs 2,182 crore (Rs 21.82 billion) during 2004-05.

Company sources said the loss due to higher aviation turbine fuel prices was in excess of Rs 650 crore (Rs 6.5 billion). Total revenue from operations grew 25 per cent at Rs 9,677 crore for the last financial year, against Rs 7,751 crore (Rs 77.51 billion) in 2004-05.

"Air-India is slated to surpass the Rs 10,000 crore (Rs 100 billion) mark in this financial year with current expansion programme," sources said. However, with the rise in jet fuel prices, total expenditure too grew 25 per cent at Rs 9,660 crore (Rs 96.60 billion) during the year under review compared with Rs 7,610 crore (Rs 76.10 billion) during 2004-05.

To curb adverse impact of its fuel bill, the airline has extended its hedging limits from 10 per cent of its international uplifts to 25 per cent.

"This will give flexibility to the company to hedge up to 75,000 barrels a day, up from the current limit of 30,000 barrels. However, the total number of barrels to be hedged will be limited to 7,50,000 a quarter," said S Venkat, company secretary.

The wage bill, too, had adverse affect on the airline's operation. It constituted 11.20 per cent of the total expenses of Air-India. The total wage bill for 2005-06 stood at Rs 1,055 crore (Rs 10.55 billion), much higher than Rs 977 crore (Rs 9.77 billion) in the earlier financial year.

Sources said high crew salary, navigational cost, landing and handling charges had also impacted the operations of the airline.

Air-India entered into a purchase agreement with US-based aircraft manufacturer Boeing for acquiring 68 aircraft at a listed price of $11 billion. The airline is also readying for a merger with Indian.