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Airports are not generating sufficient cash flows to sustain operations: APAO

The overall cash loss for the sector is estimated at around Rs3,500 crore in FY2021, impacted by a 66% year-on-year slip in passenger traffic amid COVID-19 induced travel restrictions. Photo: PTIPremium
The overall cash loss for the sector is estimated at around Rs3,500 crore in FY2021, impacted by a 66% year-on-year slip in passenger traffic amid COVID-19 induced travel restrictions. Photo: PTI

  • Airport operators in India have suffered catastrophically from the ongoing covid-19 outbreak in terms of its traffic base, revenues, and cash balance from March last year

Poor cash flows amidst the covid-19 pandemic that have resulted in downgraded credit ratings have made it impossible for airport operators to take further financing support from financial institutions leading to maintaining airport infrastructure a big challenge, Association of Private Airport Operators (APAO) said in a statement on Wednesday.

"Airport operators in India have suffered catastrophically from the ongoing covid-19 outbreak in terms of its traffic base, revenues, and cash balance from March last year. While the first wave of the pandemic had already wiped-out traffic in FY 21 denting the financials of the airports, the onset of the 2nd wave of COVID-19 has further compounded the crisis as domestic passenger traffic has dropped to less than 18-25% of pre-COVID levels," APAO said.

"Furthermore, international traffic, which is invariably the high yield segment for airports, has been suspended for the last 14 months ( international traffic has dropped to 5 - 10% of precovid levels) and there are no signs of restart of scheduled operations in near future," it said adding that the looming threat of a third wave further indicates a muted traffic recovery in FY 22.

According to rating agency Icra, Indian airports are expected to witness a decline in operating income by 61% to 8,400 crore while reporting an operating loss of around 1,700 crore and a net loss of 5,400 crore in FY2021.

The overall cash loss for the sector is estimated at around 3,500 crore in FY2021, impacted by a 66% year-on-year slip in passenger traffic amid COVID-19 induced travel restrictions.

"As the cash flow situation is precarious, airports have been requesting the government amidst an extremely challenging environment to provide some relief measures to the

airport operators which will directly alleviate the financial burden for airports," APAO said in the statement.

"Relief measures are required not only to ensure sustaining operations at airports, but also needed to save jobs and allow economic recovery of the airport sector," it said, adding that airports are not generating sufficient cash flows to sustain operations, and meet debt obligations and would require government support to sustain operations.

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