BackAirlines expected to trim losses in FY16
Airlines expected to post a lower combined loss of $550-550 million in the year to 31 March, down from the June estimates of $680-750 million
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Mumbai: India’s airlines are expected to post a lower combined loss of $550-550 million in the year to 31 March, down from the June estimates of $680-750 million, according to consulting firm Capa India in its India outlook report released on Thursday.
The consulting firm said low-fare airlines such as IndiGo, run by InterGlobe Aviation Ltd, GoAir, run by Go Airlines (India) Ltd, AirAsia India Pvt. Ltd and SpiceJet Ltd will increase their profits from $200-220 million to about $300 million.
Capa India said IndiGo will post net profit closer to $250 million, and may even exceed $250 million.
IndiGo, the only consistently profitable airline in India since 2008-09, is in the process of listing its stocks on exchanges after a successful initial share sale that closed on Thursday.
IndiGo posted a record ₹ 640.43 crore quarterly profit for the three months ended 30 June on a revenue of ₹ 4,317.19 crore.
The airline has reported an Ebitdar (earnings before interest, tax, depreciation, amortization and rentals) of ₹ 1,577 crore, with an Ebidtar margin of 37%.
IndiGo reported a record net profit of ₹ 1,304 crore for the year ended 31 March—a fourfold jump over the previous year on a revenue of ₹ 14,320 crore.
Capa India said it is seeing further improvement in GoAir’s and SpiceJet’s profitability, with the latter posting $30 million in net profit and GoAir over $20 million for 2015-16.
It said Jet Airways (India) Ltd, a full-service airline and the country’s second largest airline by passengers carried, is expected to post a net profit between $90-100 million for the current fiscal year.
However, Capa India estimated that state-run airline and national flag carrier Air India Ltd will post losses around $750-800 million, while new airlines AirAsia India and Vistara, run by Tata SIA Airlines Ltd, posting losses between $80-90 million.
Referring to the industry fundamentals, Capa India said lower fuel costs and a range-bound rupee will help airlines. Jet fuel cost accounts for 40-50% of the operating cost of an Indian airline. “Growth is robust and will continue to be strong. Domestic growth could marginally exceed 15%," it said.
It also noted that with raising funds is likely to become easier especially after IndiGo’s initial public offering, the aviation industry is on top of a favourable cycle.
GoAir might get listed on the stock exchanges in 2015-16, Capa India said. A GoAir spokesperson denied any such development.
Capa India also said SpiceJet will be able to raise funds at more favourable valuations, while Jet Airways will also raise additional debt in the current fiscal year.
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