Indian carriers to fly into huge losses this year: report

  • Tushar Srivastava, Hindustan Times, New Delhi
  • Updated: Jun 27, 2014 12:37 IST

It is likely to be yet another grim year for the Indian aviation industry with domestic carriers headed for another year of huge loss in 2014-2015. The combined annual loss is expected to reach $1.3-1.4 billion (Rs 7,823 -8,425 crore), according to a report by aviation consultancy firm Centre for Asia Pacific Aviation (Capa).

Indian carriers posted $1.7 billion (Rs 10,231 crore) in losses in 2013-14, with accumulated losses since 2007-08 reaching $10.6 billion (Rs 63,791 crore) and debt and liabilities climbing to almost $16 billion (Rs 96,256 crore).

Several incumbent carriers, Capa said, were in a precarious financial position with average cash balances equivalent to less than three weeks of revenues. "Airlines, other than IndiGo will require $1.6 billion of funding this year just to sustain their business models. The prospects for further direct investment in airlines remains very uncertain in the current climate," it said.

Budget carrier IndiGo, India's only profitable airline, could place an order for a further 200-250 aircraft at the Farnborough Air Show in July and possibly conduct an IPO later in the year.

The Capa report says IndiGo "will continue to outperform the market and remain the sector's leading bright spot, although very intense competition has significantly reduced its profitability." "A potential IPO in third quarter of 2014-2015 is likely to attract significant interest, which could be the largest ever aviation IPO in India."

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