Ease in travel restrictions to raise airport infra sector's profits: ICRA

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SME Times News Bureau | 24 Nov, 2021
Ease in travel restrictions post the lockdown is expected to raise the airport infrastructure sector's operating profits in FY22, ICRA said on Wednesday.

However, the outlook for the sector continues to remain "negative", the ratings agency said.

"The sector's operating income and operating profits are estimated at Rs 14,000 crore and Rs 3,250 crore (operating loss of Rs 1,450 crore in FY21), respectively, in FY22," said Rajeshwar Burla, Group Head, Corporate Ratings, ICRA.

"Domestic traffic has witnessed healthy MoM (month-on-month) growth since June 2021 with traffic reaching 72 percent of pre-Covid levels in October 2021, the highest since the start of the pandemic. Passenger traffic is expected to witness 82-84 per cent YoY (year-on-year) in FY22," the ratings agency said.

"The significant ramp up in vaccination, decline in Covid cases and pick up in revenge leisure travel are supporting the growth in domestic passenger traffic," it added.

In addition, the recent announcement by the Ministry of Civil Aviation to increase the seat capacity to 100 per cent with effect from October 18 also supported the sector.

Further, ICRA notes that the ongoing capacity expansion plans at some major airports are expected to be delayed by 12 to 18 months due to the pandemic.

"The completion cost is expected to increase due to increase in interest during construction as some of the airports have funded capex with bullet bonds which have been drawn down at once," it added.