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Domestic carriers, which face high fuel costs and a fall in the rupee, combined with fierce competition, would require a mbadive injection of capital of about Rs.350 billion over the next three or four years. next years, the ICRA rating agency announced.
These funds would help reduce the high level of debt in the airline industry, says ICRA in a note.
Significantly, the three listed airlines, Jet Airways, IndiGo, operated by InterGlobe Aviation, and SpiceJet, are currently in red.
"CIFAR estimates that an equity injection of about 350 billion rupees would be needed over the next three to four years," said Kinjal Shah, vice president and co-director of business sector ratings. , ICRA.
The average price of jet fuel increased by about 35% from April to last November compared to the same period last year, the average rupee depreciated by 7%. , 8% against the US dollar during this period, according to the rating agency.
resulted in an increase in the cost per seat-kilometer available of airlines, not supported by an increase in yields, he adds.
In fact, yields fell for most airlines, despite soaring costs. This is due to the fact that the sector is price sensitive and suffers from increasing capacity, as the national aviation sector is likely to experience significant overcapacity in the next two to three years, as indicated by the rating. .
The three listed airlines reporting a combined net loss of 36.4 billion rupees during the first half of the year, Mr. Shah added: "This means that the three listed airlines have lost about 20 crores of rupees a day during the first half of fiscal 2019 ".
In the short term, Indian carriers' balance sheets should remain tight until they are able to reduce their indebtedness by combining improved operational performance and / or capital injection, a- she added.
In the note, the ICRA also stated that, although domestic pbadenger growth remains strong, the challenges are equally confusing, as airlines are using predatory pricing to to maintain their load factors ((
This has led to a deterioration in the economic situation of the industry and therefore to financial stress, according to the note.
According to the CIFAR, in order to limit additional losses, National airlines have used a number of measures, including the rationalization of non-fuel costs, network overhaul, streamlining of routes and workforce reduction, among others.
"Some companies have also requested approval for the deferral of payments to suppliers and funders and also delay the payment of employee salaries, mitigate their cash short-term asymmetries, "notes the note.
Airlines are also committed to increasing their miscellaneous income, which currently accounts for less than 10% of domestic airline revenue, compared to a much higher share (10-20%) in developed markets, did he declare.
"These measures, however, are not enough to offset the sharp rise in jet fuel prices and the rising cost of rupee depreciation," said ICRA.
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