National carrier Air India said its losses more than doubled to Rs 5,548.26 crore for financial year 2008-09 as compared with a loss of Rs 2,400 crore in 2007-09,on declining load factors and falling yields. The figures should come as a wake-up call to the government as well as the airlines management and staff that urgent measures would be required to salvage the carrier and plug any further losses. The limping state-owned carriers total revenue fell to Rs 13,479 crore in 2008-09 from Rs 15,252 crore during the previous fiscal. The Air India board,which met in Chennai today,approved the annual accounts for the last fiscal,holding global financial meltdown,low passenger load factors and falling yields responsible for the financial losses. In the backdrop of a strike threat by pilots from November 24 protesting any cut in their salaries,a Group of Ministers (GoM),headed by finance minister Pranab Mukherjee,would be meeting on Wednesday to discuss the financial restructuring and deliberate on the bailout to the beleaguered carrier by way of equity infusion and soft loan. At the same time,the government has made it clear that it would not give a blank cheque to AI and would release funds only when come concrete measures to reduce financial costs are implemented. The passenger load factor declined from 63.8 per cent in 2007-08 to 59.5 per cent in 2008-09 and the number of passengers travelling on Air India flights declined from 13.21 million in 2007-08 to 10.36 million in 2008-09,said an Air India spokesperson. Among the major factors contributing to its losses is the high fuel costs in 2008-09 when ATF prices touched a peak of $147 per barrel. The airline had to cough up a whopping fuel bill of about Rs 6,200 crore in 2007-08. With the induction of a large number of 111-plane order from Boeing and Airbus,its depreciation costs have also risen significantly,along with the heavy interest burden on aircraft loans and borrowings. As most of the payments made by the airlines are in dollar terms,either for aircraft or their repairs or even for payment of over 150 expatriate pilots on its rolls,Air India suffered losses due to the depreciating value of the rupee. As part of cost-cutting and saving enhancement exercise,the airline this month invited separate bids for leasing out 10 of its aircraft six Boeing and four Airbus freighters. Air India,has in the past one year,taken a series of measures to enhance revenue and reduce costs,which include restructuring/ withdrawal of certain loss-making routes,return of leased aircraft,rationalisation of wage structure,aggressive sales and marketing initiatives to improve yields and load factors,phasing out of old fleet and induction of new aircraft on various domestic and international routes,leveraging its potential in engineering and cargo for enhanced revenue. These measures,together with the pick up in demand in the domestic and international traffic,are likely to result in improvement in the operating performance for the year 2009-10,subject to fuel prices remaining stable during the rest of the year. These aim to turn it around in the next two-three years,said CMD Arvind Jadhav The airline is at its wits end trying to come up with cost-cutting measures to shore up its performance and make a fit case for government bailout,for which it has engaged a private consultant,Booz and Allen. Air Indias announcement comes in the wake of a forecast by the International Air Transport Association which has predicted that the losses in the aviation industry for calender year 2008 would be around $416.8 billion,followed by a loss of $11 billion for the year 2009 due to weak revenue environment and increase in operating costs,like fuel and other charges.
