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Aviation loss to widen to ₹21,000 cr. in FY21: ICRA

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‘Sector needs up to ₹37,000 cr. more’

The Indian aviation business is estimated to report a major web loss of ₹21,000 crore in FY21, in opposition to a web loss of ₹12,700 crore in FY20, with the business debt degree rising to ₹50,000 crore (excluding lease liabilities) over FY21-22, ICRA stated in a report.

The ranking company stated the business would require further funding of ₹35,000-₹37,000 crore over FY21-23.

“The two listed airlines [IndiGo and SpiceJet] have together lost ₹31 crore per day during H1 FY21. As the airlines gradually recommenced domestic operations, along with continued chartered and cargo operations, thereby resulting in significantly higher yields, their daily cash burn started reducing,” Kinjal Shah, VP, ICRA Ltd., stated. “This resulted in a lower daily loss of ₹26 crore for the two listed airlines in Q2 FY2021, against ₹37 crore in Q1 FY2021,” she stated.

“With a sequential improvement in domestic passenger traffic, and continued cost rationalisation initiatives by the airlines, further supported by the benign aviation turbine fuel (ATF) prices, the daily cash burn for airlines has further reduced in Q3 FY2021,” Ms. Shah stated.

The ranking company stated the restoration in home passenger site visitors will depend on containment of the unfold of COVID-19, willingness of customers to undertake leisure journey, restoration in macroeconomic progress, journey restrictions, quarantine norms, and restoration in enterprise journey.

“The ongoing increase in the number of infections, and expectations of non-availability of a vaccine on a wide scale until H2 CY2021, will in turn continue to impact consumer willingness to travel and even business travel as businesses and corporates continue their work-from-home policy,” ICRA stated.

“ICRA thus expects FY2021 to witness a higher decline of 62-64% in domestic passenger traffic, than its earlier estimates of 41-46% decline. With this, the domestic passenger traffic will reach much lower than the FY2011 levels. The recovery in air travel is expected to be gradual once the COVID-19 threat is allayed,” Ms. Shah added.

The impression of the pandemic will likely be extra profound and last more on worldwide journey in contrast to home journey.

“ICRA expects the FY2021 international passenger traffic for Indian carriers to witness a significant YoY decline of 88-89%, higher than its earlier estimates of 67-72% decline,” Ms. Shah stated.

Due to the low base of FY21, the passenger progress in FY22 for each home and worldwide operations will likely be sturdy; nevertheless, it would nonetheless be considerably decrease than even FY16 ranges.

In the close to time period, the stability sheets of Indian carriers will stay careworn till the carriers are ready to scale back their debt burden, it stated.

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