New Delhi: The state-owned Indian Airlines has declared its first annual profit after four years, mainly die to hefty cost cuts and improved productivity, according to the chairman of the company.

Indian Airlines has declared an audited net profit of Rs44.17 crore ($10 million) in the year ended March 2004, against Rs100.97 crore loss the previous year. Indian Airlines in March this year had said it expected to post a net loss of Rs41.25 crore.

The airline said it had budgeted for an operating profit of Rs1.71 crore in the current business year and a net loss of Rs2.50 crore. Indian Airlines said its operating revenues increased by 13.37 per cent to Rs4,650 crore against a 6.81 per cent rise in operating expenses of Rs4,525 crore in 2003-04.

Sunil Arora, chairman of Indian airlines told news persons that the company had achieved the turnaround despite a 5.5 per cent increase in average fuel prices during the year, mainly by following strict cost controls and a rise in the number of passengers carried and better fleet utilisation.

Indian Airlines, which is ready to place a $2.1-billion-order for 43 Airbus planes and operates a fleet of 45 Airbus A320s, three A300s and two Dorniers said it saved Rs 100.9 crore rupees in the year through early retirement schemes, rationalising menus and better inventory control. Indian Airline''s passenger traffic rose 5.5 per cent while average plane loadings rose to 65.8 per cent of the airline''s capacity in 2003-04 from 64.6 per cent the previous year.

The airline had a domestic market share of 40.5 per cent in 2003-04 to Jet Airway''s s 42.9 per cent.