Only the brave or the foolhardy would venture into the business of flying in the Indian skies. If this is the unflattering first impression one makes after running through the financials of most airlines in India, it would be understandable.
Consider this: National carrier Air India has not made a profit since the merger with Indian Airlines in 2007; it has a mind-boggling debt of Rs 47,000 crore, accumulated losses of Rs 20,300 crore, and is desperately dependent on government handouts for survival. Kingfisher Airlines has not made a profit since inception in 2005, has loans in excess of Rs 6,000 crore (after the recent loan restructuring), and accumulated losses of around Rs 5,300 crore. The net worth of both these airlines today has been badly eroded.
The other original full-service carrier, Jet Airways, made a loss on a consolidated basis in each of the last four years, has debt of around Rs 13,700 crore and accumulated losses of Rs 1,730 crore (as on March 2011). Clearly, not a pretty picture.
The skies, though, look somewhat clearer when it comes to the country's low-cost carriers. SpiceJet, the only listed pure play low-cost airline in the country has posted profits in the last two years (after losses for three years before), and has little debt on its books (at least for now).
The other two low-cost players — Indigo and GoAir — whose financials are not publicly available, are reported to be doing well. Not surprisingly, of late, it is players in this category which have been stealing the thunder, in the sky and also on the airwaves. They have been increasing their market shares and have been placing mega orders for aircraft in anticipation of future growth, mainly in smaller cities and towns of the country.
23/07/11 Anand Kalyanaraman
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