Veena Singh/BOMBAY
AIR INDIA EXPECTS to post a loss for the coming financial year after only narrowly staying in the black for 1994/5, according to bleak predictions from the airline's board.
An initial estimate of the airline's performance for the year to the end of March 1995 puts pre-tax profits at less than Rs200 million ($6 million). That is down tenfold from the Rs2.2 billion reported a year ago and Rs333 million in 1992/3.
Air India has also set a loss-making budget for the present 1995/6 year, according to confidential minutes of a board meeting held in New Delhi at the end of March to discuss the airline's financial performance.
The bleak forecasts come as the airline continues to struggle with rising operating costs and renewal of its ageing fleet. Figures for 1993/4, the latest fully audited year, show that the airline's operating expenses grew by 13%, despite a fall in capacity. Lower utilisation rates on some aircraft types has damped down capacity, even with new additions to the fleet.
Although Air India's balance sheet remains healthy, showing cash holdings of Rs12 billion, the airline's financing costs have risen following the acquisition of four Boeing 747-400s.
The airline has also invited offers from about 20 international financial institutions to help finance another two 747-400s due for delivery by August 1996. The total deal is worth around $379 million, of which Air India will have to secure 35% by October, with the remainder due to be paid on delivery.
The package for the four existing aircraft came to $647 million, with the bulk underwritten by guarantees from the Exim US export bank.
Another piece of the airline's financial restructuring was put into place earlier this year as the Indian Government converted loan capital of nearly $25 million into equity.
Source: Flight International
