Listed aviation players, InterGlobe Aviation (IndiGo) and SpiceJet, are expected to narrow their losses sequentially in the September quarter of FY21 (Q2FY21), as India gradually opened up its skies and unlocked the economy. Besides, mild appreciation of rupee during the quarter would aid non-fuel costs, say analysts.
According to industry reports, the early part of Q2 witnessed localised lockdowns, slot restrictions at major airports, and low consumer confidence due to rising incidence of Covid-19 cases. However, during the latter half, industry operated at 43-45 per cent of pre-Covid capacity in the month of September, which is twice the capacity seen in June.
In this backdrop, analysts at Prabhudas Lilladher believe IndiGo and SpiceJet could have operated at 34 per cent and 36.4 per cent of Q2FY20 capacity, respectively.
“Average number of domestic passengers per flight too improved from 90 per cent in June to 98 per cent in September. With loads on charters and Vande Bharat flights fairly strong, we expect IndiGo and SpiceJet to report sequential improvement of around 700bps in passenger load factors (PLFs) to 68.4 per cent and 76.1 per cent, respectively,” they noted in a sector preview report.
Given this, Prabhudas Lilladher expects yields – or average fare per passenger per mile -- to remain strong at 10 per cent and 7 per cent year-on-year (YoY) increase for IndiGo and SpiceJet, respectively.
Those at Elara Capital, on the other hand, see the yield improving 20 per cent YoY for the former and 25 per cent for the latter “on improvement in airfares as the minimum airfares capped by the government is higher than the airfares last year, along with increase in domestic capacity from 30 per cent of pre-Covid in Q1FY21 to 45 per cent in July and August, and 60 per cent in September”.
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