Indian aviation in need of urgent doctoring: Report

New Delhi: The huge interest burden on the aviation industry and the highly overleveraged position of Indian carriers are reflected in the fact that the combined debt of the top three airlines, Air India, Kingfisher Airlines and Jet Airways, is $8 billion (bn). That is equivalent to the total losses of all global carriers, which stands at $8-8.5 billion.
In its May report on the Indian aviation sector, the Centre for Asia Pacific Aviation (CAPA) says the combined debt of the big three could reach $10 bn by the end of this financial year, which is a full per cent of gross domestic product.
The projected debt figure is also more than five times the total losses of $1.3-1.4 bn that Indian aviation industry is expected to incur in 2008-09. And almost 17 per cent of the total losses of $8-8.5 bn projected for the global airline industry by the International Air Transport Association (IATA).
Incidentally, while Indian aviation industry accounts for 17 per cent of global losses, it only accounts for 2 per cent of global traffic.
Even as the slowdown in the industry and rising losses have made equity investment currently impossible, Indian carriers’ cash flow has been maintained through largescale loans from financial institutions. Which, say industry experts, have made these some of the most overleveraged companies in the world.
15/05/09 Business Standard

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Categories: Indian Aviation- In General May 2009