- Saturday 18 Jan 2020
Airlines in India likely to post loss of over $600 mn this fiscal: Report
Team Udayavani, Dec 13, 2019, 4:25 PM IST
New Delhi: Indian carriers are estimated to report a consolidated net loss of over USD 600 million (over Rs 4,230 crore) in 2019-20, according to aviation consultancy CAPA as it downgraded its full-year profitability projection made in June.
In June, it projected a consolidated net profit of USD 500-700 million in the optimistic case.
Currently, there are four budget carriers and two full-service airlines – IndiGo, GoAir, SpiceJet, AirAsia India, Vistara and Air India.
In its quarterly market update report on aviation outlook FY2020, CAPA India said it is the “most significant downgrade within one quarter in more than 16 years”.
The carriers are anticipated to post a consolidated net loss of more than USD 600 million this financial year, as per projection at the end of November.
The financial projections are based on the assumptions that oil prices are in the range of USD 60-65 per barrel, the exchange rate is Rs 70-72 against USD and that airlines maintain pricing discipline.
Noting that it has revised downwards full-year profitability projections for all carriers, it said the industry has failed to capitalise on Jet Airways’ closure and relatively softer fuel prices, as evidenced by an estimated industry loss of USD 350-400 million in the second quarter of the current fiscal.
“The potential benefits of consolidation and capacity rationalisation in the wake of Jet’s demise, and relatively benign fuel prices, have largely been squandered. Carriers pursued very aggressive expansion in an effort to capture slots released by Jet, resulting in downward pressure on yields,” the report, dated December 12, said.
About Air India, it said the airline’s privatisation is expected to be well underway before the end of FY 2020.
“In our earlier estimates, CAPA expected that Air India would report a loss of around USD 150 million in FY 2020, its best result in over a decade, in light of the unique circumstances presented by the closure of its largest full service competitor.
“However, these estimates have now been revised to a loss of USD 500 million, and possibly significantly more. This deterioration in the outlook is a result of Air India not having been able to fully take advantage of the opportunity available on international routes despite Jet’s exit and higher fares on international routes,” it added.
CAPA India said the situation is the result of 26 aircraft of Air India still remaining on the ground due to a shortage of funds to be able to carry out required maintenance checks.
“The Government of India has been unwilling to commit the necessary public funds in advance of a possible imminent transfer to a private owner. However, the converse approach would benefit the exchequer.
“Ensuring that the entire fleet is operational will significantly improve the airline’s financial performance and will make Air India a more attractive proposition for bidders, increasing the likelihood of a successful outcome. The government would need to commit USD 300-400 million to get all of the grounded aircraft back in the air,” the report said.
New Delhi: With the Supreme Court rejecting a review of its order that put Rs 1.47 lakh crore liability of past dues on telecom firms, Vodafone Idea's....
New Delhi: Smartphone maker Xiaomi on Friday said it is spinning off 'POCO' as a standalone brand. With this restructuring, POCO will run independe....
New Delhi: World's largest online shopping platform Amazon on Friday announced plans to create one million new jobs in India over the next five years ....
London: India attracted tech investments worth USD 9.36 billion last year, a 95 percent increase compared with the previous year, according to the dat....
Guwahati: The MSME Export Promotion Council (MSNE-EPC) is holding the first three-day summit for aspiring entrepreneurs in the North East here from Fr....
Bengaluru: KL Rahul's stupendous white-ball form makes him a firm favourite to get his place back in the red ball team even as selectors fret on all-r....
Ahmedabad: An RSS functionary here has lodged a complaint with Ahmedabad police against unidentified persons for allegedly circulating a "fake and mis....
Bengaluru: A day after Bengaluru police nabbed a six-member gang, alleged to be Social Democratic Party of India (SDPI) activists, in connection with ....
Kasargod: The dead body of a woman reported to have gone missing was found from near Shiriya bridge of Kumbale in the district on Saturday, January 18....
Kannur: GMR Airports Ltd has bagged the contract for duty-free shops at Kannur international airport in Kerala. Kannur airport began commercial ope....