Indian Aviation industry loss seen at Rs 250-260 billion in FY22, high ATF pricesand price cap challenge for airlines

NEW DELHI, Aug 31: Battered by the pandemic, Indian aviation industry is expected to report a net loss of Rs 250-260 billion in FY2022, said rating and research firm ICRA.
“Elevated ATF prices and fare caps continue to pose a challenge for the profitability of the airlines as a result of which the industry is expected to report a higher net loss in FY2022,” it noted.
As per the projection, the debt levels will remain high for the industry and are estimated to increase to Rs 1,200 billion (including lease liabilities) in FY2022, with the industry requiring an additional funding of Rs 450-470 billion over FY2022 to FY2024.
“In the near term, the balance sheets of Indian carriers will remain stressed until the carriers are able to reduce their debt burden through a combination of improvement in operating performance and / or through equity infusion,” said ICRA maintaining negative credit outlook on the Indian aviation industry.
Most airlines have initiated fund-raising plans to tide over the liquidity crisis stemming from the cash burn due to impact on demand and increase in ATF prices.
“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 FY2024,” said Kinjal Shah, Vice President and Co-Group Head, ICRA.