Financial loss suffered by Airlines in India

Airlines in India are expected to post a consolidated loss of $4.1 billion in the financial year 2021-22, similar to loss that they are estimated to have incurred in 2020-21, taking the total losses of two years to around $8 billion as a result of the pandemic so far, as per a report by aviation consultancy and research firm CAPA. CAPA expects domestic passenger traffic to be around 80 to 95 million in the financial year 2021-22 as against 52.5 million in the previous financial year. However, despite this growth it will be well below the 140 million passenger volumes recorded in 2019-20, CAPA said in the report. This projection of the traffic volume does not take into account the anticipated third wave of the pandemic, the report said. It added that the full-service carriers are expected to contribute as much as $2.1 billion in the total losses this fiscal, while the budget carriers would account for the remaining $2 billion. Airlines are estimated to need close to $5 billion of recapitalisation in the financial year 2021-22 just to survive. Out of this, it is estimated that around $1.1 billion is in the pipeline in the form of initial public offerings, qualified institutional placements and other instruments. This does not include additional funding required to achieve solvency. As per reports by CAPA, the airline industry in India is likely to be heading into a higher-cost environment at a time when it can least afford to with a possible higher crude prices and currency depreciation. Airport charges are also expected to be a potential challenge, it added. After a massive slump in April and May this year, we expect to see a moderate recovery in June as activity returns, with an acceleration in traffic from the second quarter.