Airlines go on survival mode as cash flow dries up due to coronavirus lockdown

A senior airline executive pointed out that the latest order by the government to refund for tickets booked during the first phase of lockdown for travel up to May 3 has dented their cash book.
Representational image (File Photo | AFP)
Representational image (File Photo | AFP)

NEW DELHI: From furloughing workforce to reaching out to aircraft lessors, India’s aviation industry is taking all possible steps to stay afloat till restriction on flying is lifted.

“Airlines are on survival mode. They are cutting all possible expenses. In my knowledge, they are restricting payments to aircraft lessors, which accounts to significant portion of their total expenses. They are also delaying salaries and other expenses as they want to preserve whatever cash they are left with,” said Sachin Gupta, Senior Director at CRISIL Ratings.

Majority of the 5,500-odd employees at GoAir have been sent on leave without pay (LWP) till May 3, while SpiceJet said limited staff from the engineering team has been put on LWP for a month each on a rotational basis. All the airlines have already announced pay cuts to preserve their cash flow.

A senior airline executive pointed out that the latest order by the government to refund for tickets booked during the first phase of lockdown for travel up to May 3 has dented their cash book.

“Without any relief package, the government should have allowed us to defer the bookings as no communication on resumption/cancellation of services after April 14 were made before,” he said. 

For now,  airlines have stopped accepting bookings for travel from May 4.

The executive added that they have reached out to lessors for delaying payments and sought relief on fixed expenses (mainly for airport operators) and on taxation front for the next two quarters from the government.

“Future actions by the Centre to revive the economy will be very crucial for the sector.”

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