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The unexpected steep rise in jet fuel prices coupled with devaluation of rupee are adding a burden of almost Rs 100 crore every month to the expenses of state-owned Air India.
However, the national carrier is hopeful that it will tide over the situation and meet the financial targets set by the government under the turnaround plan.
"We expect a burden of Rs 100 crore every month due to the devaluation of the rupee and wild fluctuation in its value and the unexpected increase in the ATF cost this year," Air India CMD Rohit Nandan said on the sidelines of a function to launch the new Air India-SBI co-branded credit card.
Airlines have to pay in dollars for spares for planes, apart from interest on aircraft loans, which have hit them hard due to the downturn in rupee value against the dollar.
But the Air India chief expressed hope that the airline would achieve its financial targets for this fiscal, despite the rising fuel cost and falling rupee and said "as we have a sort of hedge as we are operating to foreign destinations. So we are also earning in dollars."
Air India has also managed to drastically slash its daily losses to Rs 11 crore from about Rs 25 crore two years ago, he said.
The airline was running a daily deficit of Rs 26 crore in 2011, including about Rs 14.5 crore daily on jet fuel alone.
Supporting the recent increase in fares by the airlines following increase in ATF prices and falling rupee, he said every Indian airline was facing the same problem and none of them were making profits.
"Airlines are not into profiteering by increasing the airfares, they are just meeting their costs. It is a very tough situation," Nandan said.
Observing that the government had set certain specific financial targets as part of the turnaround plan, he said, "We have met them and registered EBDITA positive for the first time in seven years, despite a (58-day pilots') strike last year."
While launching the card, he said it offered a host of benefits to the user and has the best reward points among all the other cards.
