₹35,000 cr can keep airlines up till FY23 end, says Icra1 min read . Updated: 14 May 2020, 10:45 PM IST
The ongoing lockdown to contain the covid-19 pandemic is expected to lead to a 44% decline in revenue during 2020-21 from a year ago, Icra said in a statement
Indian airlines will need fund infusions of ₹35,000 crore till the end of FY23 to stay afloat, credit rating agency Icra said, as lower revenue and higher fixed costs erode their profitability.
The ongoing lockdown to contain the covid-19 pandemic is expected to lead to a 44% decline in revenue during 2020-21 from a year ago, the rating company said in a statement. The industry’s net debt is expected to rise to about ₹46,500 crore by 2021-22.
“Overall, the industry will witness about 41-46% degrowth in domestic passenger traffic and about 67-72% degrowth in international passenger traffic for the Indian carriers in FY2021," it said.
“The profitability of the industry will also be adversely impacted in FY21 due to lower revenues and high fixed costs (35-42% of the total cost of airlines)," it added.
Airlines are grounded and airport operations halted since 25 March due to a government-imposed lockdown to contain the covid-19 pandemic, which has claimed thousands of lives globally. The ongoing third phase of the lockdown had been announced to continue till 17 May.
“Considering the daily net loss of about ₹75 crore- ₹90 crore during the shutdown of operations and the expected weak demand, the Indian aviation industry will require additional funding of ₹325 billion- ₹350 billion over FY2021-23," said Kinjal Shah, vice president at Icra.
Meanwhile, Indian airlines have been pushing for an early resumption of domestic flights from key metros, and have warned that a prolonged lockdown could cripple their operations forever.