Domestic airlines to trim losses by up to 90% this fiscal: ICRA
The domestic airlines industry is expected to trim its aggregate net loss by up to 90 per cent to ~100 crore in FY18 from around ~1,000 crore a year-ago period aided by expected strong peak season demand in the remaining half of this financial year, ratings agency ICRA said in a note on Tuesday.
The projections, however, do not include the financials of full-service carrier Vistara and budget airline AirAsia India.
It has to be noted the loss is primarily on account Air India losses, while all other major airlines are expected to report profits during the financial year ending March 2018, ICRA said.
The study said, the domestic travel demand moderated to 16.3 per cent in the April-September period after having grown at above 20 per cent over the last two years.
Though the jet fuel prices remained higher during the first half of the current fiscal on a year-on-year, the ability of the airlines to pass-on the same supported the profitability of the industry during this period, it said.
“With peak season demand expected to be robust in H2 FY18, the aggregate net loss of the industry is expected to reduce to around ~500 million to ~1 billion in FY18 from around ~10 billion in the previous year,” ICRAassistantvicepresidentand co-head for corporate sector Ratings, Kinjal Shah, said.
Significantly, ICRA report comes on the day International Air Transport Association projected a higher net profit of $38.4 billion for the airlines in 2018, primarily driven by strong demand.
Healthy passenger load factors supported by a decline in competitiveintensityduetomoderation in capacity addition and suspensionofoperationsofthree regionalairlineshasauguredwell for the industry profitability, the ratingagencysaid.“This coupled with a gradual improvement in the core growth drivers like economic environment, tourism demand and regulatory support and a strong demand during the peak season is expected to support the industry profitability during H2 FY18,” it said.
In the last one year, regulator DGCA has suspended the flying permit of Air Pegasus, Air Costa and Air Carnival, all regional airlines following their failure to mop up required funds for carrying out operations.
“All the major airlines are expected to report higher net profits in FY18 as compared to the previous year.