Airlines likely to post record losses in 2013-14

December 2013 quarter, usually the strongest, is expected to have resulted in a further $175-250 million loss, according to a recent research, with government-owned Air India and the two listed airlines— Jet Airways and SpiceJet— being the worst performers.

Indian carriers are likely to post record losses in 2013-14 with government-owned Air India and the two listed airlines — Jet Airways and SpiceJet — being the worst performers.

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Indian carriers collectively lost over $500 million in the quarter ended September 2013. "The December 2013 quarter, usually the strongest, is expected to have resulted in a further $175-250 million loss, excluding one-off adjustments," according to a recent research report aviation consultancy firm Centre for Asia Pacific Aviation (Capa).

A further one or two similar quarters could test the holding power of some airlines and new competitors such as AirAsia, Tata-Singapore Airlines pose further challenge.

"Full-year profitability requires carriers to recoup losses in the first and third quarters. But when the industry is reporting significant losses in the peak season it is clear that the domestic Indian aviation market has a fundamental problem with viability," the report says.

In 2013-14, Jet’s losses could wipe out almost the entire funds generated from the 24% equity investment by Etihad. "As a result Etihad may need to recapitalise the company in 2014-15, which could include increasing its stake to 49%. It is possible to see Jet being de-listed in the near term," it adds.

While AI’s losses could exceed $750-800 million in 2013-14, IndiGo and GoAir are the only airlines likely to be profitable.