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3h ago

ICRA Sees Wider FY26 Losses for Indian Airlines as Demand Cools

The rating agency flags weaker pricing power from capacity growth outpacing demand.

Indian aviation industry projected to lose Rs 9,500-10,500 cr. in FY2026, says ICRA
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The Investment Information and Credit Rating Agency has cut its forecast for the financial year (FY) 2026 (Representative photo/ HT Photo)

Overview

  • ICRA projects industry net losses of Rs 95–105 billion in FY2026, widening from an estimated Rs 55 billion in FY2025.
  • Domestic traffic growth is now forecast at 4–6% to 172–176 million passengers, with Q1 FY2026 up 4.4% year on year and yields down 4–5%.
  • Interest coverage is expected to weaken to about 1.3–1.5x in FY2026 from roughly 1.5–1.7x in FY2025, indicating softer debt protection.
  • ATF averaged Rs 87,962 per kilolitre in the first five months of FY2026, still above pre-COVID levels, while the rupee weakened about 3% against the dollar.
  • Fleet growth and deliveries are adding capacity, with 855 aircraft in service as of March 31, 2025 and more than 1,600 planes scheduled for delivery over the next decade.