In addition, the industry will require additional funds of Rs 45,000-47,000 crore from FY 2022 to FY 2024, credit rating agency ICRA said.
Credit rating agency ICRA on Tuesday said the pandemic-hit Indian aviation industry is expected to post a net loss of Rs 25,000-26,000 crore, while its debt level may rise to Rs 1.2 lakh crore in the current fiscal.
Also, the industry will require additional funds of Rs 45,000-47,000 crore from FY 2022 to FY 2024. According to ICRA, in the near future, balance sheets of Indian carriers will remain under pressure unless they are able to reduce their debt burden through a combination of improving operating performance and/or equity investments.
Thus ICRA has maintained its negative debt outlook on the Indian aviation industry.
Most of the airlines have initiated fund raising plans to tide over the liquidity crisis arising out of liquidity crunch due to impact on demand and rise in injet fuel prices.
According to ICRA, the aviation industry is expected to witness a strong growth of 45-50% year-on-year in domestic air passenger traffic and 80-85% in international air passenger traffic. However, this will be achieved at the bottom of the previous financial year and will be driven by a faster pace of vaccination and gradual relaxation of restrictions by regulatory authorities.
However, growth will still remain significantly lower than the 2015-16 and 2012-13 levels, and the industry is expected to report higher net losses in 2021-22, ICRA said.
“Given the resurgence of the second wave of the pandemic, the improvement in passenger traffic will only be gradual, with domestic passenger traffic expected to reach pre-COVID levels only by FY2024,” said Kinjal Shah, Vice President & Co. – said the group. Head, ICRA.
He said the increased ATF prices (over 71 per cent annually in the five months of FY 2022) and fare cap continue to pose a challenge to the airline’s profitability.
“Therefore, the Indian aviation industry is expected to report a net loss of ₹250-260 billion in FY22. Debt levels to the industry will remain high and projected to grow to around ₹ 1,200 billion (including lease liabilities) in FY 2022, the industry needs additional funding of ₹ 450-470 billion from FY 2022 to FY 2024, Mr Shah said.
Improvement in domestic air passenger traffic is dependent on the pace of vaccination, consumers’ willingness to travel leisurely, improving macroeconomic growth, which in turn affects consumer sentiment and the ability to travel.
In addition, developments related to travel restrictions and quarantine norms mandated by the central and state governments, and recovery in business travel will also set the pace of recovery, ICRA said.
Stating that the impact of the pandemic on international travel would be more profound and longer lasting as compared to domestic travel, it said that apart from these, recovery in international travel is also dependent on the opening of scheduled international operations. Government.
Besides, the macroeconomic blow to the global economy and the government-mandated travel restrictions and quarantine norms of various countries will be the deciding factors for the recovery. Significantly, regular commercial international flight services have been suspended since the end of March 2020. The ban has now been extended till 30 September.
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