NEW DELHI :
Indian airlines are expected to lose over $600 million ( ₹4,273 crore) in FY 2019-20 as compared to a previous estimate of full-year profit of $500 million to $ 700 million ( ₹3,561 crore to ₹4,985 crore), aviation consultancy and advisory agency CAPA India said on Tuesday.
“This is CAPA India’s sharpest downward revision in financial projections (of the airlines) within one quarter,” it said in a tweet.
Two of the largest airlines in India, InterGlobe Aviation Limited-operated IndiGo and Ajay Singh-controlled SpiceJet, which are both listed on the BSE, reported huge losses during the September quarter.
SpiceJet plunged to a consolidated loss of ₹461.22 crore in the three months ended 30 September, from a year-earlier net loss of ₹ 382.72 crore. The losses of the budget airline would have been higher if the company didn’t make a provision for compensation from Boeing Co. due to the grounding of 737 Max aircraft.
Meanwhile, IndiGo plunged to a wider-than-expected quarterly loss during the September quarter with higher maintenance and overhaul costs outweighing the increase in passenger traffic. The country’s largest domestic airline posted a loss of ₹ 1,062 crore in the September quarter (Q2) compared with a loss of ₹652 crore an year ago.
“A series of events during the current fiscal such as discontinuation of operations of Jet Airways, grounding of the Boeing 737 Max aircraft due to technical issues with its flight control software and issues with the Pratt & Whitney engines of Airbus 320 Neos have impacted the industry’s capacity and thus passenger growth,” credit rating agency ICRA said in a report released last week.
“While the aviation turbine fuel (ATF) prices have been benign in the current fiscal, the yields continue to be under pressure. Coupled with rupee depreciation, this has squeezed the RASK-CASK (revenue per available seat kilometre – cost per available seat kilometre) spread, exerting significant pressure on the operating profitability of airlines,” it added.
CAPA India expects domestic air traffic to grow at 3-4% annually during FY 2019-20.
“This is subject to IndiGo meeting regulatory deadline to replace engines on close to 100 aircraft by 31 January 2020, or DGCA relaxing deadline,” it added.
Source: Livemint
