ICRA: Airlines to see loss of Rs 25,000-26,000 crore in FY22

NEW DELHI:  Indian aviation industry is expected to report a net loss of Rs 25,000-26,000 crore in FY22 on account of Covid-19 disruptions, regulatory fare-caps and significant increase in jet fuel (ATF) prices, rating agency Icra said on Tuesday. 

“Given the resurgence of the second wave of the pandemic, the recovery in passenger traffic will only be gradual, with the domestic passenger traffic expected to reach pre-Covid levels only by FY24. Elevated ATF prices (higher by 71% on Y-o-Y basis in 5M FY22) and fare caps continue to pose a challenge for the profitability of the airlines. Thus, the Indian aviation industry is expected to report a net loss of Rs 250-260 billion in FY22,” said Kinjal Shah, Vice President and Co-Group Head, Icra. 

Shah added that the debt levels for airlines will remain high and are estimated to increase to Rs 120,000 crore (including lease liabilities) in FY22, with the industry requiring an additional funding of Rs 45,000-47,000 crore of over FY22 to FY24.

The government in response to a question in the parliament last month had said, airlines in India (excluding SpiceJet) suffered cumulative losses of Rs 15,086.3 crore in FY21. Air India (loss of Rs 4,700 crore) and IndiGo (Rs 5,829.7 crore) were the worst-hit airlines. Vistara incurred a loss Rs 1,609.7 crore while AirAsia lost Rs 1,396.0 crore last year. IPO-bound Go Air’s losses stood at Rs 1,333.5 crore. Later, SpiceJet reported a net loss of Rs 998.3 crore for 2020-21 fiscal. Indian carriers suffered a loss of Rs 5,497.24 crore in FY 2019-20 and Rs 6,709.43 crore in FY 2018-19. 

The aviation industry is expected to witness a strong Y-o-Y growth of 45-50% in domestic air passenger traffic and 80-85% in international air passenger traffic during FY22, albeit on a lower base of FY21 and driven by the faster pace of vaccination and gradual relaxations in restrictions.

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