State-run Indian Airlines Ltd expects to post a broadly flat Rs 245.5 crore (Rs 2.455 billion) loss for 2002-03 but hopes to halve it next year thanks to traffic growth and cost cuts, the domestic carrier said.

The loss by the carrier, the third in a row by the airline, which is poised for a major fleet expansion, is 0.5 per cent below last year's Rs 246.8 crore (Rs 2.468 billion) loss and reflects a one-off 20 per cent average jump in aviation turbine fuel prices. Landing, navigation and insurance costs also rose.

But operating losses for the year to March 31 slid 31 per cent to Rs 153 crore (Rs 1.53 billion) thanks to lower booking agency commission and inventory costs while total revenues were estimated to have risen 6.7 per cent to Rs 4, 139 crore (Rs 41.39 billion).

Losses in 2003-04 are forecast to plummet 55 per cent to Rs 111 crore (Rs 1.11 billion) on expectations of a nearly 20 per cent jump in revenue to Rs 4,958 crore (Rs 49.58 billion), a spokesman said on Friday.

"The airline hopes fuel prices will remain steady or show a downward trend and projected passenger growth of five per cent takes place during 2003-04," an airline statement said.

India has been less hit by the global aviation downturn thanks to a growing number of domestic travellers in an economy forecast to expand 6.0 to 6.5 per cent in 2003-04, making it one of the world's fastest growing.

The carrier, whose privatisation was scrapped in 2001 due to lack of investor interest, has a 45 per cent slice of the domestic market. But the airline has faced stiff competition since losing its monopoly in 1993, mainly from privately-owned Jet Airways.

The spokesman said the airline expected employee numbers to fall by 10 per cent or by 2,000 workers in the new fiscal year to 17,000 -- 1,000 from an early separation plan to be launched and another 1,000 from natural attrition.

Indian Airlines' board has also approved establishment of a wholly-owned subsidiary to supply ground handling services to the carrier and other domestic and foreign airlines. It now earns Rs 120 crore (Rs 1.2 billion) from these services, the spokesman said.

The spokesman added Europe's Airbus SAS and Boeing Co. had extended their price offers to supply new planes to Indian Airlines, which is planning a major fleet renewal, by another six months.

Last March, the board approved a plan to buy 43 planes from Airbus, including 19 A319s, four A320s and 20 A321s, as part of a fleet renewal programme at a cost of $2.1 billion. Rival Boeing offered its 737 series for the order.

That plan, meant to meet growing air travel demand and replace old jets, is still awaiting government approval.

Indian Airlines's fleet now includes five Airbus A300s, 36 A320s and three Dornier-28s. Its wholly-owned subsidiary, Alliance Air, flies 11 Boeing 737s and four ATR-42 planes.