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Indian Airlines Seek Interest-Free Loans, Cheap Fuel as Losses Swelled to $3 Billion Amid Lockdown

© REUTERS / Amit Dave/File Photo / An IndiGo Airlines aircraft prepares to land as a man paddles his cycle rickshaw in Ahmedabad, India, 26 October 2015
An IndiGo Airlines aircraft prepares to land as a man paddles his cycle rickshaw in Ahmedabad, India, 26 October 2015 - Sputnik International
According to estimates, the Indian aviation sector is projected to contract in the current financial year (April 2020 - June 2021) and airlines will see deep financial losses. The Centre for Asia Pacific Aviation has projected that the Indian aviation industry lost approximately $3-3.6 billion between April and June this year.

As cash-strapped Indian airlines have lost revenue worth $3 billion between April and June due to the COVID-19 pandemic, the country’s Civil Aviation Minister Hardeep Singh Puri has confirmed on Wednesday that the aviation sector ha sought an interest free credit line of at least $ 1.5 billion. Puri also shared details on jobs lost in the sector owing to the pandemic with his fellow parliamentarians. 

Replying to a question from lawmakers, Puri told the upper house of the Indian Parliament that Indian carriers' revenues have dwindled to a mere $500 million in April to June this year, compared with $3.50 billion in the same period last year, thereby registering an 85 percent dip.

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The diplomat-turned-politician said that the airlines have also asked banks and financial institutions to defer repayment of loans to the industry by six months, while not treating it as a bad loan.

Due to financial distress, in the four months between April and June this year, 5,298 jobs were lost in the airline sector, 3,246 in the airport sector and 1,017 in cargo operations, while 8,466 jobs were lost in ground handling. 

In India, the Narendra Modi government mandated that a national lockdown to curb the spread of COVID-19 take effect on 25 March. The stringent first stage of the lockdown continued until the end of May; beginning in June, measures were gradually relaxed.

"Employment at airlines has reduced from 74,887 as of 31 March 2020 to 69,589 as of 31 July 2020. The employment at airports has reduced from 67,760 as of 31 March 2020 to 64,514 as of 31 July 2020," Puri informed the parliament.

Aviation consultancy CAPA had said in March this year that most airlines throughout the world would go bankrupt due to the pandemic. The CAPA report estimated a consolidated loss of $6.0-6.5 billion to the Indian airlines in the current financial year and that an estimated $4.5-5 billion in funding will be required to overcome the COVID-19 crisis in the sector.

All major Indian airlines have reported massive losses in the April - June period, with balance sheets bleeding due to plummeting revenue. 

Indigo, one of the most prominent private Indian air carriers, reported a loss of $390 million in the April - June period of this year. The aviation company had earned a net profit of $161 million in the same period last year. Another airline, Spicejet, posted a net loss of $80 million on Tuesday. All the airlines, including the national carrier Air India, have laid off staff due to impact of COVID-19 on business. 

The air traffic data released by the government on Wednesday revealed a minor uptick in passenger growth. Domestic air traffic was down 76% for the month of August, with 2.8 million people flying compared with 11.8 million last year, however, the August data is better than July, which saw 2.1 million passengers.

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