According to the Comptroller and Auditor General's performance audit report of the state-run Air India, the government may have to reassess the fund requirement for the airline. The auditor said AI understated its losses.
"Though AI reported a positive earnings of £16.6 million (April-December 2014), from a negative £19.1 million (April-December 2013), both the statutory auditor and the CAG had expressed qualified opinion on AI's accounts for all the three years (2012-13 to 2014-1), pointing out significant understatement of losses in financial statements. The understatement of losses were £ 145.6 million (2012-13), £296.7 million (2013-14) and £199.3 million (2014-15). Considering all this negative reports, the earnings also would be negative," the auditor said.
UPA-II had approved equity infusion of £4.22 billion in AI, in 2012, over a 20-period under a financial restructuring plan. The CAG, in its report on the airline's performance vis-à-vis the FRP, said it "acknowledges the efforts made by the company" to reduce cost and improve aircraft utilisation, it expresses "significant concerns on its future financial status" and "overall operational performance". The FRP required AI to raise £500 million by monetising assets in a decade from FY 2013. "AI failed to earn the targeted annual revenue of £50 million, with assets valued at £6.4 million only being monetised. This resulted in a resource gap of £193.6 million during the period from 2011-12 to 2015-16," it said.
"The airline had over-provisioned wide body aircraft, while it had an acute shortage of narrow body aircraft. Even though the company was aware of the shortage and had initiated the process of leasing Airbus A-320 aircraft as early as July 2010, only five aircraft could be inducted by March 31, 2015, against the requirement of 19," the auditor, says in the latest report.
