Air Asia India could have done better: ICICI Sec.
Air Asia India may have significantly cut its losses in the April-June quarter to ₹15.1 crore from ₹61.82 crore in the same period last year, but it could have done better considering the demand-supply mismatch after the complete grounding of Jet Airways, ICICI Securities Ltd. said. “Despite recording positive EBITDA, the firm has posted a loss of ₹15.1 crore in Q2CY19. This is after a record ₹680-crore loss in FY19,” Ansuman Deb, research analyst, ICICI Securities said.
“Fares [of AAI] remain among the lowest and fleet addition plan is also modest. Free cash flow to support the business remains inadequate for most Indian airlines barring three low-cost carriers [IndiGo, SpiceJet, GoAir],” he added.
The report said though AAI’s market share increased to 7% in the quarter, the average fare growth was significantly lower than peers.
“AAI recorded 8% fare growth in Q2CY19. This is significantly lower than IndiGo [17% fare growth in Q2CY19] and SpiceJet [11% fare growth in Q2CY19]. The fare trajectory of AAI has structurally remained the lowest among Indian players [average fare for AAI has been ₹3,124 for last 10 quarters],” it said.
AAI recently announced plans to add nine aircraft and with this the total number of aircraft will increase to 28 by the end of this year. For FY19, AAI reported a loss of ₹680 crore compared to ₹830 crore loss by Vistara, the other joint venture airline of the Tata Group.
“AAI has negative equity of ₹362 crore as of Q2CY19 after infusion of ₹500 crore in the quarter,” ICICI Securities report said.
