Austerity helps AI save Rs 600 cr in 3 months

Mumbai: The Maharaja may have a reason to smile again. National carrier Air India that weathered a critical week-long pilots strike in September has managed to save Rs 600 crore in the past three months as the management tightened belts and took strong measures to improve its finances.
Air India had reported losses of Rs 5,450 crore last fiscal year and was staring at yet another weak year after the liquidity crisis curbed air travel.
The state-run carrier expects measures like renegotiating handling contracts, cutting aircraft material costs and improved fuel management to save another Rs 500 crore in the remaining three months of the current fiscal year. The company is targeting a total annual saving of Rs 1,400 crore, said a senior Air India executive requesting anonymity. Air India spokesperson declined to comment.
The cash strapped Air India—the new entity created by the merger between Air India and Indian Airlines—was almost on the verge of bankruptcy last year as the fall in air traffic and high costs pulled down the profitability of the carrier. However, an economic revival in the past month and strong cost cutting measures have prompted Air India to resurrect its profitability.
National Aviation Company of India, which runs Air India, has been able to reduce costs by phasing out old fuel guzzling aircraft and replacing them with new, efficient planes and also by insisting on fuelling at foreign airports has been able benefit from lower fuel costs abroad.
“The airline inducted new fuel-efficient aircraft, which saved around Rs 100 crore on fuel, while another Rs 100 crore saving came through rentals and other administrative costs,” said the executive who can’t be named as he is not authorised to speak to the media.
02/01/10 Mithun Roy/Economic Times

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Categories: NACIL Jan 2010