Improved operating performance along with reduced losses, primarily due to reduced jet fuel prices, is estimated to have reduced the industry debt to Rs 580-600 billion as of March 2016 from Rs 700 billion as of March 2016, rating firm ICRA has said.
However, overall, the cash reserves of the airlines have dwindled and raising equity capital and re-financing debt obligations have become difficult for some carriers. Among airlines, full service carriers (FSCs) have been impacted the most, owing to their aggressive debt-funded capacity expansion plans, in-organic investments and higher fixed costs.
While ICRA expects the domestic airlines to continue to sustain the improved performance in FY2017, on account of favourable jet fuel pricing environment and the improving growth in passenger traffic, the Indian aviation industry is still subject to ongoing structural challenges and intense competition is placing pressure on yields.
The Indian carriers have been under severe financial stress due to a combination of weak past operating performance and high investment requirements. ICRA estimates that despite improved operating performance, the Indian aviation industry would continue to have significant funding requirements in the near term until the carriers are able to significantly reduce their debt levels through a combination of improving their operating performance or an equity infusion.
To Read the News in Full 06/06/16 Defence Aviation Post
However, overall, the cash reserves of the airlines have dwindled and raising equity capital and re-financing debt obligations have become difficult for some carriers. Among airlines, full service carriers (FSCs) have been impacted the most, owing to their aggressive debt-funded capacity expansion plans, in-organic investments and higher fixed costs.
While ICRA expects the domestic airlines to continue to sustain the improved performance in FY2017, on account of favourable jet fuel pricing environment and the improving growth in passenger traffic, the Indian aviation industry is still subject to ongoing structural challenges and intense competition is placing pressure on yields.
The Indian carriers have been under severe financial stress due to a combination of weak past operating performance and high investment requirements. ICRA estimates that despite improved operating performance, the Indian aviation industry would continue to have significant funding requirements in the near term until the carriers are able to significantly reduce their debt levels through a combination of improving their operating performance or an equity infusion.
To Read the News in Full 06/06/16 Defence Aviation Post
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