Indian airlines likely to record Rs 26k cr net loss in FY22: ICRA

01 Sep 2021 CW Team

Indian Airlines are likely to record a net loss of Rs 250-260 billion in FY 2022. Moreover, to sustain services, it would need an additional Rs 450-470 crore between FY 2022-24.

According to the ICRA, a credit rating agency, in the coming term, the stability of Indian carriers would continue to be stressed until the carriers can decrease their debts through growth in operating performance or via equity infusion. Almost every airline has initiated fund-raising plans to sustain the crisis arising from the cash burn because of the effect on demand and growing ATF prices.

Due to the Covid-19 pandemic, Indian airlines underwent many challenges resulting in severe effects and lower demand for air travel.

However, demand is likely to rebound in FY 2022 because of increasing vaccination and state governments eliminating travel restrictions amidst a decreasing number of active Covid-19 cases. The air passenger traffic reported throughout FY 2022 is likely to lag the levels in FY 2013 and FY 2016.

During FY 2022, domestic air passenger travel is estimated to see substantial yearly growth of nearly 45-50% and international air passenger traffic around 80-85%.

The credit rating company expects the restoration in domestic air travel to be contingent on the following five factors—the vaccination pace, consumers readiness, recovery in macroeconomic growth, ability to travel and consumer sentiments.

The central and state government has made mandatory quarantine norms, travel limitations, and business recovery.

On the other hand, the effect of the pandemic is likely to be more long-lasting on international travel than domestic travel. International travel is contingent on the opening up of scheduled international operations by the Indian Government.

Kinjal Shah, vice president and co-group head at ICRA Limited, informed that the debt levels would continue to be high and are estimated to grow nearly Rs 1,200 billion, including lease liabilities in FY 2022.

Image Source

Also read: Govt plans to monetise 25 AAI airports in next four years

Indian Airlines are likely to record a net loss of Rs 250-260 billion in FY 2022. Moreover, to sustain services, it would need an additional Rs 450-470 crore between FY 2022-24. According to the ICRA, a credit rating agency, in the coming term, the stability of Indian carriers would continue to be stressed until the carriers can decrease their debts through growth in operating performance or via equity infusion. Almost every airline has initiated fund-raising plans to sustain the crisis arising from the cash burn because of the effect on demand and growing ATF prices. Due to the Covid-19 pandemic, Indian airlines underwent many challenges resulting in severe effects and lower demand for air travel. However, demand is likely to rebound in FY 2022 because of increasing vaccination and state governments eliminating travel restrictions amidst a decreasing number of active Covid-19 cases. The air passenger traffic reported throughout FY 2022 is likely to lag the levels in FY 2013 and FY 2016. During FY 2022, domestic air passenger travel is estimated to see substantial yearly growth of nearly 45-50% and international air passenger traffic around 80-85%. The credit rating company expects the restoration in domestic air travel to be contingent on the following five factors—the vaccination pace, consumers readiness, recovery in macroeconomic growth, ability to travel and consumer sentiments. The central and state government has made mandatory quarantine norms, travel limitations, and business recovery. On the other hand, the effect of the pandemic is likely to be more long-lasting on international travel than domestic travel. International travel is contingent on the opening up of scheduled international operations by the Indian Government. Kinjal Shah, vice president and co-group head at ICRA Limited, informed that the debt levels would continue to be high and are estimated to grow nearly Rs 1,200 billion, including lease liabilities in FY 2022. Image Source Also read: Govt plans to monetise 25 AAI airports in next four years