Air India understated losses by ₹6K-cr in 3 years, says auditor

carrier Air India incurred an operating loss of Rs 321 crore in 2015-16 instead of an operating profit -- earning before interest payouts and taxes-of Rs 105 crore as announced by the airline last October, the Comptroller and Auditor General (CAG) said on Friday.

It was the first time in ten years that the national carrier had announced an operating profit.

“Based on reports of the statutory auditors’ report as well as the CAG’S, the airline on a standalone basis made an operating loss of Rs 321.4 crore ..We won’t say this was due to mis-reporting but this was due to non-provisioning,” said V Kurian, director general at the CAG office, told journalists Friday evening.

The company is expected to make provisions in its balance sheet for various expenditures such as depreciation and maintenance, but it didn’t, another CAG official explained..

The carrier also understated losses to the tune of Rs 6,415 crore in three years between 2012-13 to 2014-15, the CAG noted in its report titled ‘Turnaround Plan and Financial Restructuring plan of Air India Ltd’ that was tabled in Parliament on Friday Air India did not respond to

Pointing out irregularities in the functioning of the state carrier, the official auditor said that Justice Dharmadhikari Com mittee (JDC) set up to harmonise wage costs had recommended that heavy costs towards accommodation of pilots and crew members in fivestar hotels could be avoided if the AI in coooperation with the AAI aranged for their stay and food at the airports or in the vicinity where decent arrangements could be made at lower costs.

“Audit, however, noticed that the company continued to accommodate its crew in fivestar hotels. For Delhi station alone, the company incurred an expenditure of Rs 119 crore for hotel accommodation of its crew to 2015-16,” stated the report.

The report also noted that the carrier sold five of its Boeing planes to Etihad Airways at a “significantly lower cost than the “indicative” market price.

These five Boeing 777-200 LR planes were sold to the Gulf carrier Etihad for $336.5 million -$67.3 million per aircraft in 2013 against $86-92 million per aircraft obtained from two parties --M/s AVITAS and ASCENT.

AI told the CAG said that the sale was undertaken to save not only on interest payment but also to avoid maintenance costs. However, the CAG report said “While audit appreciates the savings realized in maintenance cost and interest payments, such savings cannot justify the shortcomings of the sale