Indigo takes-off after Icra's report on airline losses
Lower losses likely on continued passenger traffic growth recovery, pricing discipline and partial compensation being given by P&W to airlines
Domestic credit rating agency Icra has said in a report that net loss of airlines in India is going to nosedive to Rs 3,000 crore – Rs 4,000 crore in FY24 and FY25 from Rs 17,000 crore – Rs 18,000 crore in FY23 due to continued passenger traffic growth recovery, pricing discipline and partial compensation being given by P&W engine Original Equipment Manufacturers (OEMs). All these factors combined will result in fall in net losses that domestic airlines will report in current and next financial year.
Airlines had to ground up to 25 per cent of fleet owing to faults found in Pratt & Whitney (P&W) engines. The OEMs of these engines will partially compensate airlines for operation revenue loss.
In FY22, airlines had to suffer huge net losses amounting to Rs 21,700 crore due to the elevated Aviation Turbine Fuel (ATF) prices and fall in value of rupee.
In FY24, value of the national currency has appreciated. On Monday, March 11, 2024, rupee climbed to more than six months high of 82.65 against US dollars.
While, ATF prices have more or less hovered around Rs 1 lakh per kilo litre in FY24.
On news of sharp fall in net losses, shares of budget airline Indigo took off on the bourses. On Asia’s oldest stock exchange, the Bombay Stock Exchange (BSE), Indigo’s share flew and closed 3.63 per cent higher at Rs 3,214 per share.
Net losses of both Indigo and another budget airline, Spicejet, had reduced in calendar year 2023 (CY23.) Indigo reported net profit in every quarter of ongoing financial year. It is epected that the no frills airline may be the only major airline s to end FY24 on a profitable note.