Credit rating agency ICRA has said that the domestic airline industry is likely to post a net loss of about Rs 7,800 crore in current financial year (FY20) as against an estimated net loss of approximately Rs 10,000 crore in FY19. It expects the domestic passenger traffic in FY20 to be lower at 4.5 per cent, after five years of double-digit growth as many domestic airlines are focusing on expanding their international routes.
The agency further mentioned that improvement in the core growth drivers like economic environment, tourism demand and regulatory support is essential for improved passenger traffic growth. Though there have been steps towards improving airport infrastructure, the pace of implementation remains a key concern. ICRA’s Vice-President and Co-Head, Corporate Sector Ratings -- Kinjal Shah said that excluding Air India, the rest of the industry is expected to report a net loss of around Rs 1,500 crore in FY20 with a total debt of approximately Rs 7,000 crore as on March 31, 2020.
The industry’s prospects are expected to gradually improve, contingent on the movement in aviation turbine fuel prices. Moreover, shah stated that many of the industry players have weak balance sheet structure; and with continued losses in the near term, the industry will need approximately Rs 20,000-22,500 crore equity infusion over the next three years.