CAG slams Air India management for losses, lack of foresight

There's more trouble for the government from its auditor. The Comptroller and Auditor General's report on Air India has slammed the airline's management for a lack of foresight and said the decision to buy new aircraft caused a loss of Rs 200 crore.
 
It has said that its capacity expansion was not based on due diligence. The proposal to expand capacity was not warranted in view of intense competition and inability of Indian airlines to handle competition, the report says.

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Undue extra amount of Rs 199.48 crore was paid due to defective contract terms relating to escalation of payments, it says.
 
According to the CAG, a loss of more than Rs 315 crore has been incurred and a loss of Rs 2460 crore will be further incurred due to faulty finances.
 
Bulk purchase of aircraft indicates lack of foresight of the management in protecting financial interest of Air India while signing an agreement of such magnitude.

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The decision to pay wage arrears out of working capital loans with associated additional interest when NACIL was facing acute financial crisis was imprudent, the report says, adding, the financial case for Air India's merger with Indian Airlines was not adequately validated.

Courtesy: Headlines Today