AIR INDIA SLUMPED to heavier-than-expected losses in its financial year to March 1996, with the flag carrier blaming rising interest charges, along with the burden of depreciating its new Boeing 747-400s.

The Indian airline had forecast a loss of around Rs1.2 billion ($35 million) after three straight years of profit, but the actual deficit hit Rs2 billion. The purchase of four 747-400s over the past three years has cost the carrier more than $600 million, adding to its financial and depreciation costs.

Air India, whose share of international traffic has slipped to around 20%, complains of cut-throat competition by new competitors, such as US carrier Tower Air, on its services to New York.

Air India's sales for the year topped Rs35 billion and the airline forecasts further growth this year, with the aim of pushing up passenger numbers from 2.7 million to above the 3 million mark.

Indian Airlines is talking to Air India about the purchase of an unspecified number of Airbus A300s. The Indian domestic carrier was planning to replace some of the ten A300s in its fleet, but a cash crisis has ruled out purchase of new aircraft, however, and the airline has turned to Air India to acquire the A300s.

Source: Flight International