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  • Domestic Airlines May Narrow Losses: Estimates For Q3

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    Domestic airlines in India are expected to see smaller losses in the third quarter of fiscal year 2022 compared to previous quarters due to increased passenger traffic and higher ticket prices. Several brokerages estimate that IndiGo and SpiceJet will post losses of around Rs. 380-570 crore and Rs. 444 crore respectively for the quarter. While air travel demand recovered with around 89% of pre-pandemic daily flights in December, rising fuel costs limited profits. The outlook is uncertain due to the upcoming launch of new airlines which could impact ticket prices.

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    Domestic airlines in India are expected to see smaller losses in the third quarter of fiscal year 2022 compared to previous quarters due to increased passenger traffic and higher ticket prices. Several brokerages estimate that IndiGo and SpiceJet will post losses of around Rs. 380-570 crore and Rs. 444 crore respectively for the quarter. While air travel demand recovered with around 89% of pre-pandemic daily flights in December, rising fuel costs limited profits. The outlook is uncertain due to the upcoming launch of new airlines which could impact ticket prices.

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    12 views1 page

    Domestic Airlines May Narrow Losses: Estimates For Q3

    Uploaded by

    shashank gupta
    Domestic airlines in India are expected to see smaller losses in the third quarter of fiscal year 2022 compared to previous quarters due to increased passenger traffic and higher ticket prices. Several brokerages estimate that IndiGo and SpiceJet will post losses of around Rs. 380-570 crore and Rs. 444 crore respectively for the quarter. While air travel demand recovered with around 89% of pre-pandemic daily flights in December, rising fuel costs limited profits. The outlook is uncertain due to the upcoming launch of new airlines which could impact ticket prices.

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    Domestic airlines
    may narrow losses
    ANEESH PHADNIS
    Mumbai, 16 January

    W
    hile the third wave
    of pandemic has
    slammed the
    brakes on air travel once
    more, domestic airlines are
    expected to see contraction
    in losses in the October-
    December quarter due to
    growth in passenger traffic
    and strong yields.
    ESTIMATES FOR Q3
    Listed airlines IndiGo and (In ~ crore)  Loss estimate for IndiGo  Loss estimate for SpiceJet
    SpiceJet, collectively, posted
    a loss of ~5,901 crore in the Brokerage
    first half of 2021-22 (FY22) -380 Centrum
    due to Covid-19 impact and -444
    higher aviation turbine fuel -570
    (ATF) cost. Elara Capital
    -64
    In the second quarter (Q2),
    IndiGo and SpiceJet posted
    -306 HSBC Global Research
    losses of ~1,435 crore and ~562
    -169
    crore, respectively. -470
    Prabhudas Lilladher
    In the third quarter (Q3), -547
    airlines have seen a rebound. Elara Capital has projected a profit for IndiGo in third quarter
    According to domestic broker-
    age Prabhudas Lilladher, scheduled international pas- The brokerage estimates
    Q3FY22 was the best quarter senger flights was extended. IndiGo and SpiceJet to post a
    since the onset of the pan- International flights under the loss of ~380 crore and ~444
    demic as the domestic market air transport bubble agree- crore, respectively.
    made a swift recovery. ments continue. The key issue going for-
    Average daily flights and Centrum Institutional ward, according to HSBC
    passenger traffic was at 89 per Research has estimated 4 per Global Research, is the yield
    cent and 85 per cent, respec- cent and 7.6 per cent sequen- outlook, with the launch of
    tively, of pre-Covid levels in tial increase in yield for IndiGo two new airlines (Akasa and
    December. Passengers per and SpiceJet, respectively, in Jet Airways 2.0) and Tatas
    flight rose from 112 in Q3. Cargo business, too, would acquiring Air India.
    September to 128 in have helped companies in “While it is very difficult to
    December. their revenue growth. foresee whether the industry
    ATF cost though rose 12 per On the top 25 routes, fares will enter into a fare war
    cent sequentially, shaving off grew 5.3 per cent in the seven- resulting in decline in fares or
    gains from improved operat- day forward booking window whether the industry’s pricing
    ing and yield environment. on a quarter-on-quarter (QoQ) will be more rational. IndiGo
    Prabhudas Lilladher basis, while fares in the two- management said during its
    expects IndiGo and SpiceJet month booking window grew Q2 results call that it expects
    to report a net loss of ~470 7.4 per cent QoQ in the July- Tata Group to be a more
    crore and ~547 crore, respec- September period, according rational player and hence,
    tively, in Q3. to Centrum Institutional fares could stay at the current
    The civil aviation ministry Research. levels. However, we think
    removed the cap on domestic The actual movement in fares could fall for the simple
    capacity in October and air- yield would be driven by QoQ reason that supply growth
    lines were allowed to operate change in proportion of tickets could outperform demand
    up to 100 per cent of their booked in each of these book- growth,” said HSBC Global
    scheduled flights. The ban on ing windows, it said. Research.

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