Mumbai: With accumulated losses of close to R31,000 crore, Air India is looking to its rejig its balance sheet so as to be able to report a profit. The national carrier wants to treat a part of the government’s equity infusion as a grant or income so as to prop up the bottom line. A proposal to this effect has been forwarded by the civil aviation ministry to the finance ministry and if accepted, the carrier hopes to report a profit in 2017-18, the first time in a decade.
Though the airline is expected to report reasonably good revenues of around R21,290 crore for FY15, losses are estimated as R4,346 crore as a big chunk of revenues of will be eaten up by interest costs on outstanding borrowings of close to R40,000 crore.
The interest is funded by the government, which subscribes to the carrier’s equity capital; the airline wants this amount to be reflected as income. “The R4,300 crore of equity has been used to fund the interest cost so the correct way to account for this is to treat this as income although over the last three years it has been treated as capital in the balance sheet,” an Air India executive observed.
07/04/15 Rhik Kundu and Pranav Nambiar/Financial Express
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Though the airline is expected to report reasonably good revenues of around R21,290 crore for FY15, losses are estimated as R4,346 crore as a big chunk of revenues of will be eaten up by interest costs on outstanding borrowings of close to R40,000 crore.
The interest is funded by the government, which subscribes to the carrier’s equity capital; the airline wants this amount to be reflected as income. “The R4,300 crore of equity has been used to fund the interest cost so the correct way to account for this is to treat this as income although over the last three years it has been treated as capital in the balance sheet,” an Air India executive observed.
07/04/15 Rhik Kundu and Pranav Nambiar/Financial Express
