Mumbai: India's aviation industry is likely to slip into annual losses yet again this fiscal year as shrinking air fares and weaker finances at the nation's largest airline IndiGo mar prospects of the world's third-largest aviation market.
Aviation consulting firm CAPA warns that the industry is likely to post more than $600 million of losses in the fiscal year ending March 31 as IndiGo, owned by InterGlobe Aviation, grapples with safety concerns on its A320neo aircraft powered by Pratt and Whitney engines.
In June, CAPA had predicted that the industry would record a profit of $500 million to $700 million. Its optimism relied on bets that IndiGo would post a record profit of $400 to $500 million.
However, IndiGo, which held about 47% of the country's aviation market, has been facing troubles with the grounding of its Airbus A320neo aircraft fitted with P&W engines. After frequent in-flight shutdowns raised a security scare, the country's aviation regulator set a January-end deadline before which the carrier must put modified engines on its 100 A320neo jets.
In the quarter ended in September, InterGlobe Aviation reported its biggest-ever quarterly loss and cut its capacity expansion plans to 25% from 30%, citing delay in deliveries of aircraft by Airbus. Earlier this month, it again trimmed its capacity expansion to 20% to 23%.
CAPA now expects IndiGo's annual profit to be barely $70 million to $80 million. Meanwhile, smaller rival SpiceJet may "possibly be heading for its second consecutive full-year loss, while several other carriers are precariously placed," it said.
The consulting firm said its sharp cut in profit expectations is the most significant downgrade it did within one quarter in more than 16 years.
24/12/19 Dhanya Ann Thoppil/NewsRise/Nikkei Asian Review
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Aviation consulting firm CAPA warns that the industry is likely to post more than $600 million of losses in the fiscal year ending March 31 as IndiGo, owned by InterGlobe Aviation, grapples with safety concerns on its A320neo aircraft powered by Pratt and Whitney engines.
In June, CAPA had predicted that the industry would record a profit of $500 million to $700 million. Its optimism relied on bets that IndiGo would post a record profit of $400 to $500 million.
However, IndiGo, which held about 47% of the country's aviation market, has been facing troubles with the grounding of its Airbus A320neo aircraft fitted with P&W engines. After frequent in-flight shutdowns raised a security scare, the country's aviation regulator set a January-end deadline before which the carrier must put modified engines on its 100 A320neo jets.
In the quarter ended in September, InterGlobe Aviation reported its biggest-ever quarterly loss and cut its capacity expansion plans to 25% from 30%, citing delay in deliveries of aircraft by Airbus. Earlier this month, it again trimmed its capacity expansion to 20% to 23%.
CAPA now expects IndiGo's annual profit to be barely $70 million to $80 million. Meanwhile, smaller rival SpiceJet may "possibly be heading for its second consecutive full-year loss, while several other carriers are precariously placed," it said.
The consulting firm said its sharp cut in profit expectations is the most significant downgrade it did within one quarter in more than 16 years.
24/12/19 Dhanya Ann Thoppil/NewsRise/Nikkei Asian Review
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