Sunday, June 20, 2021

Pandemic setbacks, new investment to help Indian airlines recover : CAPA

by Staff Correspondent

In a new analysis, the leading aviation consulting, research, analytics and transaction advisory practice body – CAPA hinted that the recent surge in the COVID-19 pandemic in India has dealt another blow to the country’s economy, and its airline industry has been one of the sectors most affected. This has driven some airlines to seek new investment, while others are looking to ownership changes to increase their long-term viability.

India was making good progress in controlling the pandemic before a second wave struck early in 2021. Many other Asia-Pacific countries have suffered from a similar trend, but in India it has been particularly severe. The health system has been overwhelmed by a cumulative case total now exceeding 25 million and almost a million deaths. Travel restrictions have returned as state and central governments grapple with the crisis.

Low-cost carriers GoAir and IndiGo are preparing to sell shares in their companies to raise the funds to weather the latest COVID-19 spike. Meanwhile, suitors are preparing their bids to take over Air India, and a prospective new owner is attempting to revive Jet Airways. While the latter two efforts predate the second wave, it has still affected their progress. Despite recent delays, however, government and regulatory decisions could clear the way for these deals to proceed this year.

Lately, in another study report CAPA titled ‘Key Trends in Indian Aviation in FY2022, the leading aviation consulting, research, analytics and transaction advisory practice body already indicated that as an impact of the second surge of covid has inflicted massive losses and have also increased debt burden on carriers those were organizationally ill-equipped to absorb the situational impact.

Average passenger load factor (PLF), an airline industry metric that measures how much of an airline’s passenger carrying capacity is used, stood at about 50% during the week ending on 1 May, the report added.

In entirety, the overall aviation industry is fear to counter serious losses in FY22, similar in scale to FY21, with a serious downside risk in the event of a protracted second wave, or the emergence of third wave, the report said, adding that many Indian airlines will struggle to recover from two consecutive years of such massive business impacts.

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