Domestic airlines to post $1.4 billion loss in FY 2015, says CAPA

Domestic airlines are expected to post $ 1.3 to 1.4 billion loss (about Rs 7800-8400 crore) in FY 2015 as operating environment remains tough and demand sluggish , according to Centre for Asia Pacific Aviation. In the last fiscal airlines including Air India, Jet Airways and SpiceJet reported loss of about Rs 10,000 crore.

The structural viability of airline business models will continue to face pressures as costs are expected to increase while yields are likely to remain soft with new entrants coming into the market.

CAPA says capacity growth in current fiscal will be 8-10% with most of the capacity addition being made by new entrants such AirAsia, Tata Sinagapore Airlines and AirCosta while domestic passenger growth will be 6-8% compared to 5.2% growth last year. International passenger growth will be around 10%,'' CAPA has said in an executive summary to its FY 2015 outlook.

"Several incumbent carriers are in a precarious financial position with average cash balances equivalent to less than three weeks revenue. One carrier's cash on hand is understood to have at times dropped to the equivalent of less than one day's revenue and operations are being sustained by borrowing from travel agents against future ticket sales,'' it said.

CAPA also expects IndiGo, the largest domestic airline, to go for an initial public offering in FY 2015 and could raise $ 350 - 400 million (about Rs 2100-2400 crore). The airline is also expected to announce an order for 200-250 planes to take care of its fleet requirement post 2025. The carrier has a current fleet of 79 aircraft with an order book of 186.