Indian carrier 1QFY2013 performance indicates sustainable recovery will be challenging

In the CAPA India Aviation Outlook 2012/13, we projected that India's airlines would post a combined loss of USD1.3-1.4 billion for the 12 months ending 31-Mar-2013. However, these losses were expected to be accounted for by two carriers, Air India (USD1.3 billion loss) and Kingfisher Airlines (USD220-260 million loss). The remaining four private carriers combined - Go Air, IndiGo, Jet Airways/JetLite and SpiceJet - were expected to post a modest profit of approximately INR11 billion (USD200 million profit).

Based on 1QFY2013 performance and the expected direction of the market over the next three quarters the major update to the CAPA India forecast is that Air India's losses could ultimately be closer to USD1 billion, an improvement of USD300 million over the earlier projection. The uncertainty regarding the scale of Kingfisher's operations means that any outlook for the carrier's financials is very difficult to estimate, and its full-year loss could be higher than expected. However, the other four private carriers remain on track to achieve a USD200 million profit for the full year.