Rs. 20,000 crore: Omicron, Expensive Jet Fuel Steer Airlines to post higher losses in current financial year


New Delhi: Rating agency Crisil has said that due to the impact of covid on traffic and a double whammy on jet fuel prices, the airlines have reported their biggest loss ever in the current financial year at Rs. 20,000 crore.
It estimates a loss of 44% which is Rs. Significantly higher than the loss of Rs 13,853 crore. This will set back the industry’s recovery after fiscal 2023, he says.
Domestic air travel made a smart recovery until the beginning of last month when Omicro hit it again.
CRISIL Ratings Director Nitesh Jain said: “The three major listed airlines have raised Rs. 11,323 crore net loss. The sharp rise in domestic air traffic may have offset losses in the third quarter, but net losses will increase significantly in the fourth quarter as the third wave brings back travel bans and flight cancellations. As a result, we expect the airline to post the highest net loss this fiscal year. ”
Aviation turbine fuel (ATF) prices reached an all-time high of Rs 83 per liter in November 2021, averaging Rs 44 in FY2021 and around Rs 63 in April-June 2021.
ATF prices fell by 6-8% in December 2021 and January 2022 due to reduction in value added tax by various states, while it remained at a high of Rs 77-78 per liter, says Crisil.
Rakshit Kachal, Associate Director, Crisil Ratings, says: “Debt has increased by 35% (excluding lease obligations) to Rs. 54,000 crore. Persistent net losses will help move balance sheets forward. Negative outlook on the field.
“Under the circumstances, airlines are likely to continue to maintain cash, including deferred maintenance as well as large capital expenditures, while aircraft leases are renegotiated and other fixed costs have to be curtailed. In addition to sustaining cost control measures, the long-term third wave, the rise of competitiveness with the introduction of new types and the launch of new airlines are negative risks, ”Crisil added.
The third wave caused domestic air traffic to drop 25% in the first week of January. A similar trend was observed during the second wave in April and May 2021, when air traffic gradually decreased by 25% and 66%, respectively.

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