VISTARA'S LOSS WIDENS TO ~518 CR IN FY17

The airline's revenue doubled to ~1,390 crore on a year-onyear basis due to increase in capacity and improved loads, but loss grew 29 per cent, indicating heightened cost pressure. Net loss in FY 16 was ~400 crore. ANEESH PHADNIS reports

Vistara’s net loss widened to ~518 crore in FY17, due to rising competition and costs.

The airline’s revenue doubled to ~1,390 crore on a year-on-year basis, due to increase in capacity and improved load factor, but loss grew over 29 per cent, indicating heightened cost pressure. Net loss in FY16 stood at ~400 crore. With losses in successive years, the airline’s net worth is minus ~1,000 crore. The figures are disclosed in Tata Sons’ report for the last financial year.

Vistara, which is a joint venture of Tata Sons and Singapore Airlines, commenced operations in January 2015. The airline has widened its footprint after a slow start. It increased its fleet from 9 to 13 A320 planes and added seven destinations in FY17. Its flights per week rose to 500 by March-end, a growth of 66 per cent on a year-on-year basis. At present, it operates 16 planes and flies to 21 destinations.

Tweaks in aircraft configuration and network, too, helped the airline grow its revenue and load factor. Vistara’s passenger load factor has risen from 65 per cent in calendar year 2015 to 75 per cent in 2016 and has touched 85 per cent in first seven months of 2017. Increase in corporate business, feeds from partner international airlines and growth in international sales have also boosted revenue growth. Vistara declined comment. All the three listed airlines, IndiGo, Jet Airways and SpiceJet, made a profit in FY17. Vistara’s unit costs were much higher compared to its peers in FY16 and its outgoing chief executive officer, Phee Theik Yeoh, had indicated that steps would be taken to reduce them. Unit cost refers to cost incurred in transporting a passenger per kilometre.

“Typically, low-cost airlines take three to five years to break-even and for full-service ones it takes longer than five years,” aviation consultant Mark Martin said. “The increase in loss for Vista ra is incremental in nature. Revenue has doubled but losses have not grown in that proportion, indicating that the airline has been able to reduce its unit costs. The airline should optimise its costs further as it looks to induct wide-body planes and expand aggressively.”

The airline is likely to order over 100 planes, including a mix of narrow-body and wide-body jets for its overseas plans, and is advancing the induction of 20th aircraft to next March.

The airline recently received ~200 crore, its second tranche of funding from the promoters. With this, the total investment by the promoters stands at ~1,200 crore. The promoters had originally committed ~600-crore funding while setting up the airline in 2013.

Vistara’s net loss in FY16 stood at ~400 crore. Revenue doubled to ~1,390 cr yearon-year, due to rise in capacity and improved load factor