Flying Costs, Falling Rupee Dominate Ai Board Meet

Rupee depreciation, ballooning expenditure, South-East Asian crisis and fare wars dominated the review meeting of Air India called to assess the impact of these factors on the airlines bottomline.

At his first meeting with the departmental heads after his confirmation as Air India managing director, M P Mascarenhas said yesterday drastic measures were necessary to improve the financial performance.

The nature and scope of these measures would, however, depend on the nine unions which would be meeting the management on February 13, sources said. It is basically to take stock of the state of (financial) affairs in view of the large deficit, with liability on the productivity linked incentive (PLI) scheme amounting to Rs 175 crore and interest on working capital totalling Rs 75 crore, an official said.

Mascarenhas sought their views as the company would be faced with this growing gap between revenues and expenditure. A meeting is also scheduled for February 12 when the board sub-committee is expected to present its report on the financial status of the airline.

According to sources, though the revenues had gone up by 11 per cent between April and December, they were under pressure on account of external factors mainly due to rupee depreciation, fare wars, South East Asian currency crisis and the growing expenditure on account of PLI and the interest on working capital.

Sources said various meaningful suggestions covering a wide gamut of cost areas were put forward following a presentation made on the financial health of the company.

The sources further said everything would depend on the meeting with unions and the decisions taken thereafter.

The airline spokesman when contacted declined to give any details stating that the company would be in a position to give information once the meeting is held with the unions.