Indian airlines to slip into loss in Q2 on jet fuel cost, weakening rupee

While fuel cost is the single largest cost head for airlines, a weaker rupee means higher maintenance outgo, increased lease and interest costs on foreign currency loans

A bitter fare war coupled with increase in expenses will push several Indian airlines into losses in the second quarter.

The higher expenses are on account of an increase in the price of jet fuel and weakening of the Indian rupee against the US dollar.

While fuel cost is the single largest cost head for airlines, a weaker rupee translates to higher maintenance outgo, increase in lease costs and interest payment on foreign currency-denominated loans. These costs account for over two-thirds of sales.

“The impact of on loss due to depreciation of rupee on the lease liability could be as