Dense clouds in the sky: The Indian aviation industry is facing its most challenging period — demand has disappeared, recovery remains highly uncertain and macro factors continue to be unfavourable. Current traffic is down almost 83% from the recent peak in February 2021 and is at about 13% of pre-pandemic levels in 2019. April-June is usually the busiest quarter when the industry earns 45-50% of full-year profit, which will be wiped out this year.
The July-September quarter tends to be the weakest, which means we are not likely to see recovery until the October-December quarter at the earliest. Indigo said it is now exploring options to raise Rs 30bn. Indigo reported a cash burn rate of Rs 150m per day in the quarter to December, and we estimate its cash burn at Rs 70-75bn in FY21e.
