Indian Airlines said it expected to cut its loss by about 79 per cent to Rs 41.25 crore (Rs 412.5 million) in 2003-04 from Rs 196.56 crore (Rs 1.96 billion) in 2002-03 on account of seat rationalisation and cheaper fuel.

The airline expects to record an operating profit of Rs 15.25 crore (Rs 152.5 million) in 2003-04, a company release says. This is based on revised revenue and expenditure estimates for 2003-04, which were approved by the airline's board in New Delhi on Wednesday.

Aviation fuel prices have fallen to Rs 21,500 a kilolitre now from a peak of Rs 25,200 in March 2003.

Indian Airlines hopes to end 2004-05 with an operating profit of Rs 16.50 crore (Rs 165 million), on the back of a healthier economy and an upturn in air travel. The state-owned airline plans to increase capacity and improve seat utilisation.