Uneasy lies the airline profit path as headwinds blow

Mumbai: The clouds over the Indian aviation sector are only thickening. The financials of most airlines are in such a mess that chances of any immediate improvement look quite remote. What makes the conditions more scary is dire warnings from analysts who predict higher loss estimates for the current financial year.
In fact, there are a couple of factors ganging up here — a rupee on a downhill journey, weak operational performance and high jet fuel costs, which all are playing out to keep profit expectations depressed for FY13 as well.
Usually, the December quarter is one of the brightest spots for the Indian airline industry. But this time around, it may be a different story altogether. Both Jet Airways and SpiceJet, which reported a profit for the December quarter last year, are expected to run up significant losses.
Analysts Mark Webb and Rajani Khetan wrote in an HSBC note on SpiceJet on Wednesday: “Despite the third quarter being seasonally the strongest, we expect SpiceJet to post a loss ofRs49.8 crorealthough we believe losses will narrow from the second quarter of FY12 due to a sequential increase in yields.”
20/01/12 Amritha Pillai/Daily News & Analysis

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Categories: Indian Aviation- In General Jan 2012