Indian airlines to register consolidated loss of $4.1 billion in FY2022: Capa
2 min read 03 Jun 2021, 04:05 PM ISTAirlines are estimated to need close to $5 billion of recapitalisation in FY2022 just to survive after registering a $8 billion loss over the last two years
PremiumNew Delhi: Indian airlines are likely to register a consolidated loss of about $4.1 billion during financial year 2022, similar to the losses clocked during FY2021, due to the covid-19 pandemic, aviation consultancy firm Capa India said on Thursday.
As a result, airlines are expected to need close to $5 billion of recapitalisation in FY2022 just to survive, after registering a $8 billion loss over the last two years, Capa said in its FY2022 Airline Outlook said.
"Out of this it is estimated that around $1.1bn is in the pipeline in the form of IPOs (Initial Public Offering), QIPs (Qualified Institutional Placement) and other (financial) instruments. This does not include additional funding required to achieve solvency," the report said.
"In light of the known recapitalisation plans of Indian carriers, the incremental requirement could be reduced to $3.5 billion. However, it is not currently possible to determine whether the $1.5 billion of planned recapitalisation will materialise,"it added.
According to Capa India estimates, domestic airline traffic is expected to stand at 80-95 million during FY2022, up from 52.5 million registered during FY2021, but well below about 140 million registered during FY2020.
"This projection does not take into account a third wave.... After a massive slump in April and May, we expect to see a moderate recovery in June as activity returns, with an acceleration in traffic from Q2(July-September 2021 period)," it said.
"As was the case in the second half of FY2021, we expect to see rising confidence and continued traffic recovery in the second half of this financial year," it added.
Capa India expects international airline traffic to remain at 16-21 million during FY2022 due to border restrictions.
"However, international traffic will be particularly sensitive to discrete decisions taken by governments on such matters, which cannot be predicted," the agency said in the report.
"As with domestic traffic, the second half of the year is expected to be far more positive," it added.
According to Capa India estimates, Indian airlines will induct 70 aircraft and retire 80 aircraft during FY2022, thus adding fuel efficiency by replacing older aircraft with newer fleet.
"At the end of FY2021 49.3% of the narrowbody fleet consisted of re-engined (Airbus) Neo and (Boeing) MAX aircraft, which is expected to increase to 60.8% by the end of FY2022. Fleet renewal is a key focus area for airlines, with GoAir, Vistara and IndiGo having made the most progress to date," the agency said in the report.
"We expect AirAsia India to accelerate its fleet modernisation plans and SpiceJet is also expected to fast-track its MAX inductions post-recapitalisation," it added.
