You are here: Home » Companies » News
Business Standard

Air India profitable under GAAP, says Jayant Sinha

Air India has incurred an operating loss of Rs 321.4 crore in 2015-16

Air India

Press Trust of India  |  New Delhi 

Air India profitable under GAAP, says Jayant Sinha

Days after CAG concluded that incurred an operational loss in the previous year, the government on Wednesday said "it is possible to declare the operational profit" according to generally accepted accounting principles.

While acknowledging that there is a grey area associated with depreciation charge that CAG has brought up, Union Minister Jayant Sinha said, "We think from an accounting perspective the number we have put through is quite reasonable".

On March 10, the Comptroller and Auditor General (CAG) had said that "actually incurred" an operating loss of Rs 321.4 crore in 2015-16.

The airline, which is staying afloat on taxpayers' funds, had reported an operating profit of Rs 105 crore in the previous financial year — the first time it turned operationally profitable in a decade.

"We have full respect for CAG's opinions and we went through their recommendations and inputs very carefully and we did it thoroughly.

"Our view, based on what our accountants have told us about following Generally Accepted Accounting Principles (GAAP), (is that) indeed it is possible to declare the operational profit that we did," Sinha said.

The Minister of State for Civil Aviation was speaking to reporters on the sidelines of an event organised by SpiceJet.

"In accounting, there are some grey areas and you can either stay on one side of it or on the other side of it. Both interpretations are plausible but again following GAAP the manner in which we have dealt with the challenges is entirely appropriate," he said.

While making it clear that there was no fudging of numbers, officials at the CAG on March 10 had said figures reported by the airline are "actually under-reporting of loss".

On March 10, Air India had said the "operating profit of Rs 105 crore is as per the generally accepted accounting standards" and was calculated on the basis of reducing total expenditure excluding only the financing costs from total revenue.

"It is, therefore, the equivalent of earnings before interest and tax (EBIT) and includes a provision of Rs 1,867.78 crore of depreciation.

"Had depreciation been excluded from the expenditure, the operating profit would have significantly increased," the airline had said.

About the On Time Performance (OTP) numbers of Air India, Sinha today said it is tracked very carefully by the Ministry to ensure that the carrier provides best possible customer services.

"We have a very robust reforms agenda that we are taking forward," Sinha said in response to a query on whether the government would go for further liberalisation of FDI norms.

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Wed, March 15 2017. 23:23 IST