Air India losses to widen this year

Air India’s losses has increased by around 20% this year, going by the numbers for the first half, the government told the Rajya Sabha yesterday.

India’s national carrier has recorded a loss of Rs 4,100 crore in the first six months of the year.

On an annualized basis, the carrier may suffer a loss of Rs 8,200 crore this year, about one-fifth higher than the previous year’s loss of Rs 6865 crore. Air India’s losses had increased by about 23% in the previous year, after remaining more or less flat in 2009-10.

In comparison, various private airlines are expected to register a combined loss of Rs 10,000 crore this year.

The company’s losses this year may be even higher than the estimated Rs 8,200 crore as the price of fuel has increased in the second half. It has also been hhit by intense private sector competition and a stronger dollar.

It recently said it expected an extra Rs 2,200 crore in expenses this year due to the higher fuel price, but its revenues were also higher than what it had expected.

It also said that it expects an restructuring of its debt early next financial year, possibly in the form of equity infusion by the government. It is also trying to convert its working capital into a long-term loan.

The Indian government has infused Rs. 800 crores as equity in Air India in the FY 2009-2010, Rs.1200 crore in FY 2010-11, Rs.1200 crore in 2011-12.