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After CAG highlights Air India's operational losses, govt says airline profitable under GAAP

Days after CAG concluded that Air India incurred operational loss last fiscal, the government today said "it is possible to declare the operational profit" as per generally accepted accounting principles.

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Days after CAG concluded that Air India incurred operational loss last fiscal, the government today said "it is possible to declare the operational profit" as per 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 Air India "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 last fiscal -- 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 Air India 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 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 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.

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