The Telegraph
Friday , June 27 , 2014
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Grim outlook for aviation

New Delhi, June 26: Domestic carriers are expected to post $1.3-1.4 billion in losses in fiscal 2014-15, according to the Centre for Asia Pacific Aviation (Capa).

A tough operating environment and sluggish demand are among the reasons behind such massive losses.

The international aviation body also said IndiGo, India’s largest low-cost carrier, might float an initial public offering during the fiscal and raise $350-400 million.

IndiGo is also expected to announce an order for 200-250 planes to take care of its fleet requirement after 2025. At present, it has a 79-aircraft fleet and has placed orders for 186.

According to Capa, Indian airlines have accumulated losses of more than $10 billion over the past few years and a combined debt of around $20 billion.

The aviation sector would need at least $1.3 billion in fresh capital this year to stay afloat, Capa said.

Painting a grim picture Capa said the financial position of several airlines is quite bad. “Several incumbent carriers are in a precarious financial position with average cash balances equivalent to less than three weeks revenue. One carrier’s cash in hand is understood to have at times dropped to the equivalent of less than one day’s revenue,” it said.

According to the aviation body, the domestic carriers will continue to face pressure. “Airlines’ viability 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,” it said.