Air India is hopeful of meeting its financial targets as per the turnaround plans despite an unexpected increase in expenditure on account of aviation fuel cost and depreciation of rupee that is costing an extra Rs 100 crore per month to the national carrier.
The price of Air Turbine Fuel (ATF) witnessed a sharp hike recently. This, along with the falling rupee has increased the operating costs for Air India. The carrier pays in dollars for spares, apart from the interest paid on loans.
Air India Chairman Rohit Nandan, however, expressed confidence that the airline will be able to achieve its financial targets set for this fiscal by the government. "We have a sort of hedge as we are operating to foreign destinations. So we are also earning in dollars," he said on the sidelines of a programme here.
He said the airline has also managed to slash its daily losses to Rs 11 crore from about Rs 25 crore two years ago. The airline was running a daily deficit of Rs 26 crore in 2011, including about Rs 14.5 crore daily on jet fuel alone. Defending the recent hike in fares, Nandan said it was not Air India alone but every Indian airline was facing the same problem and none of them were making profits. He said they were not making profit by increasing fares but just meeting costs. "It is a very tough situation," Nandan added.
The government had announced a turnaround plan for Air India last year by infusing money into the company after setting specific financial targets. "We have met them and registered positive for the first time in seven years, despite a 58-day pilot strike last year."
The government will infuse an equity of Rs 30,000 crore by 2020 subject to conditions that Air India has to achieve.