Thursday, March 12, 2020

COVID-19 cloud: IndiGo says earnings to be ‘materially impacted’, others cancel flights

During a period that is usually deemed to be the leanest in a year for Indian airlines, the added impact of the COVID-19 outbreak has carriers bracing for impact from plummeting demand, mounting flight cancellations and a consequential grounding of a part of their fleets. IndiGo, India’s largest airline which handles nearly half of the country’s domestic passengers, said on Wednesday it expects its quarterly earnings to be “materially impacted” because of the coronavirus outbreak.

“In January and February 2020, IndiGo experienced modest impact from the coronavirus. We cancelled our flights to China and Hong Kong and reduced frequency to certain other Southeast Asia markets. This capacity was redeployed in other markets without having a material impact on our revenues,” IndiGo said in a notice to the exchanges. “Over the past few days, however, week-on-week, we have seen a 15-20 per cent decline in our daily bookings. Please note that the numbers could change from here based on how the situation evolves,” it said.

The International Air Transport Association has estimated global revenue losses for airlines of up to a maximum $113 billion, excluding impact on cargo operations.
IndiGo, which ferried 6.79 crore passengers last year, said: “We expect our quarterly earnings to be materially impacted because of the above. In addition, the rupee has also depreciated sharply which will have an adverse impact on our dollar denominated liabilities primarily on account of capitalised operating leases”.
However, IndiGo is not the only airline to run into headwinds developing from the coronavirus outbreak. Almost all major Indian airlines including Air India, Air India Express, SpiceJet and Vistara have cancelled flights to several Southeast and West Asian destinations on account of weak demand. “Future passenger loads are expected to be down. Typically, between March 10 and April 15, worst loads of the year are witnessed because of exam period, which also curtails business travel. While it will be unfair to blame everything on coronavirus, some impact is being seen. People have not really started booking for summers,” said Ameya Joshi, a former aviation industry professional dealing with network planning and founder of NetworkThoughts.
Further, with cases in Europe rising daily, Air India — currently India’s only long-haul operator — could be faced with excessive capacity of wide-bodied aircraft. The national carrier, which operates Boeing 787-8 Dreamliner and Boeing 777 aircraft for its medium- and long-haul international flights, has already curtailed its operations to Rome, Milan and Singapore, in addition to operating smaller aircraft to some destinations like Jeddah. “Due to the prevailing situation of coronavirus in different locations across the globe, there are many destinations, which are expected to face a drop in foreign tourist arrivals because of the advisories issued by various governments. Customers are wary of making fresh bookings to the affected locations and airfares to these destinations have dropped by over 40 per cent. We have received nearly 35 per cent cancellation queries from travellers planning their trips to foreign locations in holiday season,” said Sabina Chopra, co-founder of
Vistara took delivery of its first Dreamliner aircraft earlier this month, and the airline’s officials said they were “perplexed” about deployment of the plane on one of its planned destinations — London, Paris, Moscow and Tokyo — given the current situation. To begin with, Vistara will operate the aircraft on domestic routes.
12/03/20 Pranav Mukul/Indian Express
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