Wednesday, December 05, 2018

Mounting losses may delay AirAsia India’s IPO take-off

It is a little-known secret that AirAsia India is the fastest growing airline in the country. But its latest quarterly results show that the carrier’s good run may not be sustainable for long.

The airline’s mounting losses also indicate that its plans for an IPO and its foray into international operations could be pushed further. For the July-September quarter, AirAsia India’s net losses widened to ₹308.21 crore. For the same period, the previous year, its losses were at ₹16.39 crore. On a sequential basis, the net loss for the second quarter was ₹61.8 crore, data on its website reveal.

Given the market turbulence, which has also hit other carriers, it may take much longer for the airline to break even against the earlier target of FY19, a presentation made to the investors says.

On almost all parameters, the airline has seen a considerable lag: the average fare during the third quarter has seen a decline of 15 per cent and the revenue per passenger too has declined 13 per cent. However, there has been an increase of 36 per cent in the number of passengers it carried compared with the same period last year.

This shows that it has been unable to charge a higher fare because of the tough competitive environment even though the number of passengers it flies has gone up. The airline needs to fix this issue first before looking at the other ones. A detailed questionnaire sent to AirAsia India went unanswered.

The airline’s capacity grew 61 per cent in the third quarter but it came at a cost as revenue per average seat kilometre (ASK) dropped 28 per cent. The costs per ASK, too, grew 13 per cent at the same time.
05/12/18 K Giriprakash/Business Line

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