For airlines, cash flows are looking good again

Mumbai/Bangalore: Cash flows of airlines, which had turned into a trickle with falling passenger traffic and fares, are swelling again, but unlike in the past, carriers are not rushing to expand their operations.
Instead, they are building cash reserves that will see them through the next dry spell.
A senior executive of Jet Airways, who did not want to be named, confirmed that airlines were seeing better inflow of cash as industry yield and demand picked up. He said it has turned positive after a long a time.
"Improved conditions haveresulted in positive cash flow. It will provide relief to us because we can use the same for our working capital requirements," he said.
Dwindling cash from operations was forcing Jet and some other domestic carriers to rely on borrowings from banks and institutions to meet their working capital needs.
Some of them resorted to sales and leaseback (S&L) of aircraft to infuse funds into their companies to meet their day-to-day cash requirement.
Samyukth Sridharan, chief commercial officer (CCO) of SpiceJet Ltd, also said there was a "healthy flow of cash" due to improving environment in the market, though he does not see this resulting in explosion of supply in the market like in the past -- 2005 and 2006.
"The industry has realised it was partly overcapacity that caused problems. I don't think airlines will expand with this flush of money. They'll do it very rationally, slowly," he said.
28/12/09 Praveena Sharma & Ramiya Bhas/Daily News & Analysis

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Categories: Indian Aviation- In General Dec 2009