Key Points
New Delhi: The Indian aviation industry is expected to log a net loss of Rs 30-40 billion (3,000 to 4,000 crore) in the current financial year, similar to the loss posted in 2023-24, according to ratings agency ICRA..
The pace of recovery in industry earnings is likely to be gradual owing to the high fixed-cost nature of the business ICRA expects the Indian aviation industry to report a similar net loss of Rs 30-40 billion in FY2025 as seen in FY2024, which is significantly lower from levels of Rs. 170-175 billion in FY2023, as airlines continue to witness healthy passenger traffic growth and maintain pricing discipline, the ratings agency said in a report...
ICRA said that despite a healthy recovery in air passenger traffic and improvement in yields, the movement of the latter will remain monitorable due to elevated ATF prices and depreciation of the rupee vis--vis the US dollar over pre-Covid levels, as both these factors have a major bearing on the airlines cost structure...
However, healthy yields, high passenger load factor (PLF) and partial compensation available from engine OEMs would help absorb the impact to an extent, ICRA said, adding that in the current fiscal, the industry has also faced challenges related to availability of pilot and cabin crew, leading to several flight cancellations and delays, which impacted capacity availability and added to customer grievances...
ICRAs outlook on the Indian aviation industry is stable, amid the continued recovery in domestic and international air passenger traffic, with a relatively stable cost environment and expectations of the trend continuing in FY2025, the agency said.. ICRA added that the momentum in air passenger traffic witnessed in FY2024 was expected to continue into FY2025, though further expansion in yields from the current levels may be limited...
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