Aviation industry to bring down net loss to Rs 3-5k cr from Rs 17k cr

Chennai: The Indian aviation industry’s net loss is expected to come down to Rs 3000 to Rs 5000 crore in FY24, down from Rs 17,000 crore in FY23.

Airline companies are expected to report an aggregate net loss of Rs 3000 crore to Rs 5000 crore in the current fiscal due to improved pricing power and yields. The domestic passenger traffic in September was 19 per cent higher than the year-ago month and the international traffic between April and July was 32 per cent higher than last year, finds ICRA.

The industry had reported a net loss of Rs 17,000 – Rs 17,500 crore in FY2023 due to due to elevated ATF prices along with the depreciation of the rupee against the US dollar. It was much lower than the net loss of Rs 2.17 lakh crore in FY2022.

Despite the high fixed cost nature of the business, the airline companies have been able to improve their ability to shore up their yields without impacting the demand. The ATF prices gradually declined sequentially until June 2023. However, they increased by 2 per cent sequentially in July 2023, by 8 per cent in August 2023, by 14 per cent in September 2023, and by 5 per cent in October 2023. From April 2023 till September 2023, ATF prices were lower on a YoY basis.

Select airlines face financial distress, and stretched liquidity issues while some airlines have adequate liquidity and/or financial support from a strong parent, supporting their credit profile. For the year ended March 2023, IndiGo had reported a profit of Rs 2,654 crore.

However, the credit metrics and liquidity profile of the others will remain under stress over the near term, notwithstanding some improvement relative to the last few years. Aircraft manufacturers are facing supply-chain challenges, resulting in the grounding of certain aircraft by some airlines.