TBM Staff - Mumbai
The Indian aviation industry is projected to report a net loss of INR. 20-30 billion in FY2025 and FY2026, slightly lower than earlier estimates but higher than the INR. 10 billion loss in FY2024, according to ICRA. Supply chain challenges and engine failures have hindered capacity over the past 18 months, impacting overall industry performance.
Engine issues, especially with Pratt and Whitney (P&W) engines, have grounded a significant portion of the fleet, with about 134 aircraft grounded by June 2024. This has strained industry capacity, increased operating costs, and led to higher lease rentals. Airlines have also faced crew shortages, resulting in flight cancellations and delays, adding to customer grievances.
Despite these challenges, healthy yields, high passenger load factors (PLF), and partial compensation from engine manufacturers may help mitigate some financial pressures. However, the industry’s high fixed costs and elevated aviation fuel prices are expected to delay recovery in earnings.
Financial distress continues to affect select airlines, with liquidity issues remaining a concern. The recent liquidation vote for Go Airlines by its creditors highlights the ongoing financial struggles within the sector.
