Air India working on cost-cutting moves

Mumbai: 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.
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.
24/11/07 Business Line

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