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    India's airlines may cut FY16 losses by up to 72%: CAPA

    Synopsis

    The Sydney-based consultant said the country’s carriers may at their best lose $350 million, down from $1.25 billion in the last financial year.

    ET Bureau
    MUMBAI: India’s airlines may cut their cumulative losses by up to 72% this financial year, as a decline in fuel prices and rise in demand help the carriers such as Air India to reduce individual losses and low fare carriers improve profitability, said CAPA-Centre for Aviation.

    The Sydney-based consultant said the country’s carriers may at their best lose $350 million, down from $1.25 billion in the last financial year.

    Low cost carriers IndiGo, SpiceJet and Go Air will post a cumulative profit of around $300 million to $350 million, it said in a note. It added Jet Airways would likely make a profit of $90-$100 million while Air India may lose around $600 million. Tata Sons’ two ventures Air Asia India and Vistara and new airlines such as Air Costa will together lose $80 million-$90 million, CAPA estimated.

    “Indigo’s FY16 profits could be $250 million,” or more, according to the report. CAPA said it sees further improvement in the profitability of Go Air ($20 million) and Spicejet ($30 million).

    CAPA’s estimates come hours of ahead of the first airline earnings announcement for Q3 by IndiGo later in the day.

    The consultant said it estimates this could be the start of an industry turnaround given lower fuel costs continue and the rupee is range bound and stable. According to the estimates, domestic traffic growth in this FY would be just over 20%. International growth is seen at over 8%.

    CAPA also said in its note that raising funds will become easier post Indigo’s IPO last year, something Go Air CEO Wolfgang Prock-Schauer too had said recently, calling IndiGo’s debut on the bourse “certainly positive for sentiment”.

    Go Air is preparing for an IPO. CAPA said it sees SpiceJet raising funds and Jet raising additional quasi-debt before March 2016.


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