A-I board meet on December 12 to discuss aircraft acquisition, VRS

Rupali Mukherjee

New Delhi, Dec 10: Close on the heels of withdrawal of Tatas’ bid for Air-India, the airline board has called a crucial meeting on December 12 to discuss its business plan, which includes aircraft acquisition and voluntary retirement scheme (VRS).

A senior Air-India official said, “The board is expected to take up issues such as augmenting the fleet size, restructuring of flying routes and adding on a variety of new routes, besides VRS.”

The meeting assumes significance in the light of the statement made by Union civil aviation minister Shahnawaz Hussain that the airline would be “strengthened” subsequent to the withdrawal of Tatas. He, however, did not offer any details of the proposed strategy that the government may adopt.

Earlier, the decisions regarding major capital expenditure, purchase of new aircraft and VRS were kept in abeyance as it was felt that the new management would decide on them.

The September 11 terrorist attacks and the downturn in the sector have affected Air-India adversely, resulting in a loss of Rs 250 crore. This is 86 per cent of the proposed budgeted revenue and works out to Rs 1,644 crore. The airline had budgeted to earn a revenue of Rs 1894.75 crore for the period October 2001 to March 2002.

Post September 11, there were large-scale cancellations of travel plans by tourists and business travellers from US and Western Europe leading to a decline in traffic. Air-India was forced to cancel its flights to the US, like other major airlines, for four days resulting in a loss of around Rs 10 crore.

At present, the airline’s fleet consists of 27 aircraft, of which 23 are owned and four have been taken on lease. Air-India is considering induction of four additional A310-300 aircraft on dry lease —two by the end of December and two in the second quarter of 2002.

For financial year ended March 2001, Air India’s net loss declined to Rs 28.5 crore from Rs 38 crore in the previous fiscal.

Air-India for the first time recorded a revenue of over Rs 5,000 crore, while the loss during 2000-01 was the lowest in the past six years.

The airline’s total revenue (provisional) increased by 11 per cent to Rs 5,180 crore for the year 2000-01 from Rs 4,662 crore in the previous year. The airline incurred an expenditure of Rs 999 crore on fuel in the year 2000-01 as against Rs 702 crore in 1999-2000 and Rs 564 crore in 1998-99.