Aviation

IndiGo, SpiceJet face major air turbulence after Corona hit, may soon run out of fuel

The forward journey from here on is going to be very turbulent for Indian aviation firms, a sector that has probably taken the worst hit from the Coronavirus crisis.

Regional airline Air Deccan on Sunday announced ceasing of operations until further notice, becoming the first Indian airline to succumb to the lockdown crisis. The airline sent all employees on sabbatical without pay.

Travel bans globally as well as domestically have virtually paralysed the capital-intensive sector, and domestic airlines are staring at big losses in March quarter.

A delay in the much-anticipated government relief is only making matters worse, as it has made any fundraising difficult. A major oil price crash in international markets came as godsend, but the oil producers’ bid to cut output and cushion the price fall may take away much of that advantage by the time the airlines are back in the sky again.

Analysts noted the 11-12 per cent interim drop in ATF prices since March 23 would have little impact as operations remain suspended since March 25.

Besides, a 5.8 per cent fall in the rupee against the dollar during the quarter increased the outgo on dollar-based costs, said Centrum Broking, which expects steep forex mark-to-market (MTM) losses on operating lease liabilities.

The brokerage expects IndiGo to report loss of Rs 1,750 crore for March quarter, primarily due to Rs 1,010 crore forex MTM loss. SpiceJet is projected to report Rs 1,050 crore loss, led by a Rs 650 crore forex hit.

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