Indian aviation industry to report net losses of Rs 21,000 in FY2021: Icra

By India Today

Credit rating agency Icra Limited on Thursday in a report said Indian airlines will post net losses of about Rs 21,000 crore during the fiscal year (FY) 2021, a result of the travel restrictions and impact on passenger traffic due to the coronavirus pandemic.

Icra said Indian airlines would require additional fundings to the tune of Rs 37,000 crore over FY2021 to FY2023 to recover from losses and debt, adding that the agency maintains a “negative credit outlook” on the Indian airline industry.

The report read: “The Indian aviation industry’s capacity and passenger growth have been significantly impacted since the Covid-19 pandemic, due to which the Ministry of Civil Aviation (MoCA) stopped international travel operations with effect from March 23, 2020 and domestic travel operations with effect from March 25, 2020.

Post the initial recommencement of operations of the scheduled domestic flights with effect from May 25, 2020 to a limited extent i.e. maximum 1/3rd of their respective approved capacity of Summer Schedule 2020, the MoCA permitted increasing the capacity to 45% with effect from June 27, 2020 and further to 60% with effect from September 02, 2020. However, the recovery in domestic passenger traffic has been rather subdued, even though there is substantial sequential improvement. With effect from November 11, 2020, the MoCA has increased the permitted capacity to 70%,andfurtherto80%witheffectfromDecember03,2020”.

The profitability of the Indian airlines remains adversely impacted during FY2021 due to lower revenues and high fixed costs even though passenger traffic continues to improve sequentially.

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