Losses mount at Asia-Pac airlines; will Indigo, SpiceJet fare better?

By Livemint

The International Air Transport Association (IATA) has said airlines operating in the Asia-Pacific (Apac) region, including India, are expected to report combined losses of $31.7 billion in 2020. These losses are estimated to be lower in 2021 at $7.5 billion.

While a sharp reduction in losses is estimated, note that losses are still expected to remain high next year. With the idea of remote working having accelerated post the pandemic, the need for travel has reduced substantially, and analysts worry that some of the damage to the sector may linger for some time.

Even so, some analysts reckon Indian airlines may be slightly better off. “Some of the Indian airlines shouldn’t be incurring losses in the financial year 2022 (ending March 2022),” said an analyst requesting anonymity. Factors that could help the recovery include anticipated rebound in traffic, sustained cost reduction efforts and a stable Indian rupee. Of course, this would also require crude oil prices to stay subdued.

Prabhudas Lilladher Pvt. Ltd estimates InterGlobe Aviation Ltd to report post tax loss of Rs4456.3 crore in FY21. InterGlobe runs the IndiGo airline, India’s largest. The brokerage firm estimates IndiGo to swing to a profit in FY22 and estimated earnings stand at Rs1938 crore.

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