The federal accountant's report titled Turnaround Plan and Financial Restructuring Plan (FRP) of Air India Ltd further reveals many inconsistencies in the implementation of the scheme, five years after it was announced.
The chief of Comptroller & Auditor General of India (CAG), who released a report on state-owned carrier Air India's 20-year financial and operational revival plan on Friday, claimed that the national airline had reported operating profit of Rs105 crore in 2016 fiscal when it had actually made operating losses of Rs321.4 crore in that year.
"Air India is claiming an operating profit of Rs105 crore for financial year 2015-16 but based also on the statutory auditors' reports, the airline had an operating loss of Rs 321.4 crore last year because the required provisions were not made," V Kurian, director general of CAG told reporters.
He also pointed to understatement of losses on AI's books of account.
The federal accountant's report titled Turnaround Plan and Financial Restructuring Plan (FRP) of Air India Ltd further reveals many inconsistencies in the implementation of the scheme, five years after it was announced.
"Though AIL (Air India Ltd) reported a positive EBITDA (earnings before interest tax depreciation and amortisation) of Rs166 crore (April-December 2014) from a negative Rs191 crore (April-December 2013), both statutory auditors and CAG of India had expressed qualified opinion on the accounts of AIL, for all those years (2012-13 to 2014-15) pointing understatement of losses in the financial statements presented by the company," says the report in a section on status of implementation of the Turnaround Plan (TAP).
Under TAP-FRP, the government had announced a bailout package of Rs 42,182 crore in April 2012 for the loss-making government-owned airline over 20 years. Of this, an amount of Rs 22,280 crore had already been pumped into AI till March 2016
The 198-page report is critical on how the beleaguered airline had underperformed on most aspects of revival scheme and had failed in meeting its targets "fully".
It states that the rapid rise in AI's short-term credit to Rs 14,550.88 crore, as on March 31, 2016, against a target of Rs 3,645.87 crore along with a "lower" than estimated "generation of revenues" had "largely eroded the benefit of the FRP.
Considering this, the official auditor has suggested that the airline and ministry of civil aviation may need to "reassess the fund envisaged in the plan".
The CAG report also revealed that the airline has also fallen miserably short in generating revenues from asset monetisation due to flawed selection of assets.
As per the revival scheme, AI was expected to earn Rs 500 crore every year through monetisation of its assets but according to the official auditor it had been able earn just Rs 64.06 crore till now; "This has resulted in a resource gap of Rs 1,935.94 crore during the period from 2011-12 to 2015-16".
CAG further points to large scale operational mismanagement by the airline in terms of aircraft mix, excess workforce, utilisation rate of its planes, route planning, on-time-performance (OTP) and others.
"Achievement of milestones prescribed in TAP for rationalisation of staff costs, hiving off subsidiaries, integration of information technology (IT) systems, monetisation of assets, aircraft deployment and operational performance targets were partially or were significantly delayed," states the report.
All these, it said, were not only hitting AI's bottom-line but had also pushed down its passenger market share from 17.9 per cent in FY15 to 15.9 per cent in FY16.
Parama Sen, principal director, Comptroller & Auditor General of India (CAG), wondered whether the revival plan was helping AI.
"There are questions on whether it (FRP and TAP) has helped them. My feeling is that it hasn't really served much purpose. The plan had certain assumptions at the base of it, one of them being very fundamental that they will work towards being a more efficient airline. Which they did not," she said.
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