Indian aviation industry may incur losses worth INR 26,000 cr in FY22: ICRA

Pandemic-hit Indian aviation industry is expected to report a net loss of INR 25,000-26,000 crore while its debt level may increase to INR 1.2 lakh crore in the ongoing fiscal year, credit ratings agency ICRA said .

Also, the industry will be requiring an additional funding of INR 45,000-47,000 crore over FY2022 to FY2024, it said.

According to the report, in the near term, the balance sheets of Indian carriers will remain stressed until they are able to reduce their debt burden through a combination of improvement in operating performance and / or through equity infusion.

ICRA has thus maintained its negative credit outlook on the Indian aviation industry.

Most airlines have initiated fund-raising plans to tide over the liquidity crisis stemming from the cash burn due to the impact on demand and increase in jet fuel prices, it said.

The aviation industry is expected to witness a strong year-on-year growth of 45-50 per cent in domestic air passenger traffic and 80-85 per cent in international air passenger traffic during 2021-22, according to ICRA. It will, however, be achieved on a lower base of the previous fiscal year and driven by the faster pace of vaccination and gradual relaxations in restrictions by the regulatory authorities.

It will, however, be achieved on a lower base of the previous fiscal year and driven by the faster pace of vaccination and gradual relaxations in restrictions by the regulatory authorities.

However, the growth will still be significantly lower than the 2015-16 and 2012-13 levels, and the industry is expected to report a higher net loss in 2021-22, said ICRA.

Given the resurgence of the second wave of the pandemic, the recovery in passenger traffic will only be gradual, with the domestic passenger traffic expected to reach pre-COVID levels only by FY2024, said Kinjal Shah, Vice President and Co-Group Head, ICRA.

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