India’s airlines are under renewed pressure to raise cash or face the risk of having to downsize, consolidate or have their planes repossessed by lessors as a surge of Covid-19 infections roils travel.
Passenger traffic fell by nearly 30% in April from a month before and has halved again so far in May, forcing even the country’s biggest and most cashed-up carrier, IndiGo, to prepare for action.
IndiGo’s parent, Interglobe Aviation, will meet on Friday to consider an equity raising, just months after it abandoned plans to raise up to Rs 4,000 crore ($543 million) in January in response to a speedy recovery in travel.
With traffic plummeting, according to aviation ministry data, IndiGo’s cash burn is expected to rise to $3.4 million a day – a level last seen in September – from $2 million a day at the end of 2020, an analyst who tracks the company said.
This means IndiGo, which has more than a 50% share of the market, may look to raise $543 million to $679 million amounting to at least two quarters of cash burn, said the analyst, who declined to be named as he was not authorised to speak publicly.