The Indian aviation industry is expected to report a Net Loss of Rs 21,000 crore in the FY21 due to lower revenues and high fixed costs, according to ICRA.
The industry’s debt level will increase to Rs 50,000 crore over FY 2021-22 and the industry will require additional funding of Rs 35,000 crore to 37,000 crores over FY21 to 23.
“In the near term, the balance sheets of Indian carriers will remain stressed until the carriers are able to reduce their debt burden through a combination of improvement in operating performance and by way of equity infusion”, said ICRA.
The 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 from March 23 and domestic operations from March 25.
After the initial recommencement of operations, the recovery in domestic passenger traffic has been rather subdued even though there is a substantial sequential improvement.
In the first seven months of FY21, the domestic aviation industry has witnessed a year-on-year decline of 73 percent in its capacity as measured by the available seat kilometers (ASKM).
Coupled with the restrictions on capacity deployment by the MoCA to contain the spread of the virus and various state-specific restrictions and quarantine regulations, this will result in a 60 percent decline in domestic capacity in FY2021.