ICRA has announced that it expecting the Indian aviation industry to report losses as high as 25000 – 26000 crore and requiring additional funding of Rs 45000-47000 crore over FY2022 to FY2024, this would be increasing its debt level to Rs 1.2 lakh crore in this fiscal year.
Maintaining its negative credit outlook, ICRA said that in the near term, unless the Indian carriers reduce their debt burden and improve their operating performance and/or through equity infusion, their balance sheets would continue to bleed. It stressed that airlines suffering from a liquidity crisis over decreased demand and increased fuel prices have initiated fund-raising plans to tide over it.
Kinjal Shah, Vice President and Co-Group Head of the credit rating agency ICRA, said that due to the second wave of COVID, the recovery in passenger traffic will be slow; It may take until FY 2024 for the domestic traffic to reach pre-COVID levels. The Increased ATF prices and fare caps have also depleted the profitability of the airlines.
The aviation sector is expected to have a year-on-year growth of 45-50 per cent in domestic and 80-85 per cent in international air passenger traffic during 2021-22, This however will be on the lower base of the past fiscal year, said ICRA.
The pace of recovery in domestic air passenger traffic will depend on several factors such as pace of vaccination, the willingness of consumers to do leisure travel, macroeconomic recovery, developments related to central and state government-mandated travel restrictions quarantine norms and recovery in business travel.
Additionally, factors such as, travel restrictions, quarantine norms of various countries and opening up of scheduled international operations that are regulated by the government will also be the key influence in paving the path for recovery of the sector.
Source: Business Standard