Moneycontrol

Budget 2023Budget 2023

PARTNERS

  • Tata AIA Life Insurance
  • Hafele
  • Motilal Oswal
  • SMC Global Securities Limited
  • SBI Life
Live: Markets live: Adani shares extend slide
Budget 2023
Budget 2023
you are here: HomeNewsBusiness

Airlines’ dilemma - consolidate or contract to fly out of COVID turbulence

Airlines are bleeding and planning to raise capital to survive. Experts say airlines will have to either contract operations or resort to mergers and acquisition to become viable but both options have pitfalls and challenges

July 08, 2021 / 09:35 AM IST
Travel and tourism collage with airplane against blue sky with clouds (Source: ShutterStock)

Travel and tourism collage with airplane against blue sky with clouds (Source: ShutterStock)

The turbulence in India’s aviation sector since the pandemic struck in March last year and the gloomy outlook gives airlines two difficult options: consolidation or contraction.

Experts say both options have problems in the sector that needs to be prepared for normal traffic at some stage but is crippled by heavy losses and cash burn in various operations, whether it is airlines, airports or related businesses.

The two listed airlines in the country, IndiGo and SpiceJet reported losses in the March quarter. Market leader Indigo’s loss grew 32 percent to Rs 1,147 crore while Spicejet’s loss narrowed to Rs 235.3 crore from Rs 807 crore a year ago, helped by its growing cargo operations.

To meet this difficult financial situation SpiceJet plans to raise up to Rs 2,500 crore, while IndiGo is looking at raising up to Rs 3,000 crore through Qualified Institution Placements.