ICRA maintains negative outlook on aviation sector

Ties traffic growth to vaccine launch

Indian carriers will continue to have a poor balance sheet in FY22 despite a likely year-on-year growth of 78% in domestic air passenger traffic and 164% growth in international traffic, ICRA said in a report.

“If a vaccine is launched earlier [before H2 CY2021] with reasonable availability, domestic air passenger traffic could witness a further upside in FY2022, with an estimated growth of 93%, and international air passenger traffic could witness an estimated growth of 235%,” ICRA said.

“With an improvement in passenger traffic in FY2022, ICRA expects the Indian aviation industry to report a y-o-y growth of 57% in revenues, with the industry’s net loss reducing to ₹146 billion from an estimated net loss of ₹210 billion in FY2021,” Kinjal Shah, vice-president, ICRA Ltd., said.

“The debt levels will remain high for the industry and are estimated to be range bound at around ₹500 billion [excluding lease liabilities] in FY2021 and FY2022, with the industry requiring an additional funding of ₹350-370 billion over FY2021 to FY2023,” she said.

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