Airlines fly into cash-flow problems

Bangalore: Airlines are trying hard to keep their business afloat despite strong headwinds that threaten to crash-land them into a severe financial crisis.
However, some strains of the cash-flow problem and the capital crunch owing to rising operational costs and falling demand growth, and thus revenue growth, are already emanating from the industry.
A New Delhi-based regional airline is so starved for cash that it has grounded one of its aircraft (BAE RJ70) to rip off spares from it whenever needed — a bleak reminder of what Air Sahara (now JetLite under Jet Airways) did just before it went under.
“It (the regional airline) does not have the financial muscle to maintain the inventory of spares. This way, they can operate the other two BAERJ 70s in their fleet without disturbing their on-time performance. It’s a desperate measure,” said an industry insider.
But it’s not just the smaller operators that are feeling the heat of spiralling fuel prices; bigger airlines are also pinching every penny to keep their aircraft in the air.
06/06/08 Praveena Sharma/Daily News & Analysis

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Categories: Indian Aviation- In General Jun 2008