Thursday, September 12, 2019

Low-cost airlines set to report high EBITAR margins in FY20, says Crisil

New Delhi: Low-cost airlines like SpiceJet, IndiGo and Air Asia (India) are set to see their earnings before interest, tax, depreciation, amortisation and lease rentals (EBITAR) to grow to 24-25 per cent this fiscal compared to 15-16 per cent in the last fiscal on the back of firmer fares and strong passengers loads, Crisil said in a statement on Wednesday.

According to Crisil, the improvement in the EBITAR margin and the operating cash flows are expected to touch a decadal high of ₹4,700-5,200 crore this fiscal. Unlike fiscal 2019, a majority of the LCCs are expected to post positive operating cash flows.

The statement added that fares are expected to rise because of limited capacity additions in the industry since Jet Airways temporarily ceased operations in April.

Crisil estimates domestic fares to jump 7-9 per cent on-year, the highest rise since fiscal 2013, when Kingfisher ceased operations. It expects domestic passenger load factor (PLF) for the industry to remain flat at around 86 per cent in fiscal 2020.

Benign fuel costs, coupled with expected lower foreign exchange losses and a rise in the share of fuel-efficient aircraft such as A320 neo and A321 neo from 23 per cent in fiscal 2019 to about 27-30 per cent in fiscal 2020, is expected to aid contraction in operating costs (excluding rentals) in fiscal 2020.
11/09/19 Business Line
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