Indian carriers may ground 150 planes; stare at quarterly loss on coronavirus impact: Report

All Indian airlines will report significant losses in first quarter of this year and may initially ground around 150 planes as shock from coronavirus pandemic will be "far deeper and much longer", according to a report. Aviation visory firm CAPA India on Wednesday said even before COVID-19 (coronavirus) appeared on scene, most Indian carriers alrey h very strained balance sheets and almost liquidity.

"This latest shock will once again expose vulnerability of India's aviation system as happened during fuel price spike in 2008. But on that occasion shock was short-lived, even if its impact reverberated for several years. This time, shock itself will be far deeper and much longer," it said in a report.

In wake of significant reduction in services, report said Indian carriers might initially ground around 150 aircraft, and number is expected to increase as more domestic operations are curtailed over coming weeks.

"If decline in traffic continues to be severe, majority of fleet could be grounded by April," it ted.

As per CAPA India, all Indian airlines will report significant losses in first quarter even with oil prices at around USD 30 per barrel.

"At an industry level, consolidated losses are estimated to be in range of USD 500-600 mn for quarter (excluding Air India). However, se are very preliminary estimates and are subject to furr downward revision.

"In absence of serious and meaningful government intervention, such an outcome could le to several Indian airlines shutting down operations by May or June due to a lack of cash," it said.

Furr, report flagged possibility of retrenchments in domestic airlines industry. Reduced scale of operations could impact requirement for around 30 per cent of airline staff and up to 50 per cent of ground handing staff. For first couple of months, this could potentially be handled through mandatory leave and leave-without-pay initiatives for 1-2 months. But should situation continue beyond a few weeks, it would quickly result in short-term retrenchment, it ded.

In case severity of coronavirus outbreak increases, CAPA India said that regardless of any fiscal concessions and support that government might offer, most airlines would have to shrink ir operations, and more vulnerable carriers may shutdown.