Vistara’s net loss widens to Rs 518 cr in FY17

Vistara’s net loss widens to Rs 518 cr in FY17




Vistara’s net loss widened to Rs 518 crore in FY 2017 due to rising competition and costs. 


The airline’s revenue doubled to Rs 1,390 crore on an annual basis due to increase in capacity and improved loads but loss grew over 29% indicating heightened cost pressure. Net loss in FY16 stood at Rs 400 crore. With losses in successive years, the airline’s net worth is negative by Rs 1,000 crore. The figures are disclosed in Tata Sons annual report of last financial year.


Vistara, which is a joint venture of Tata Sons and Singapore Airlines, started operations in January 2015. The airline has widened its footprint after a slow start. It increased its fleet from 9-13 A320 planes and added seven destinations in FY17. Its flights per week rose to 500 by March-end, a growth of 66% on a year-on-year basis. 





At present, it operates 16 planes and flies to 21 destinations.


Tweaks in aircraft configuration and network too helped the airline grow its revenue and loads. Vistara’s passenger load factor has risen from 65% in calendar year 2015 to 75% in 2016 and has touched 85% in first seven months of 2017. Increase in corporate business, feeds from partner international airlines and growth in international sales has also boosted  revenue growth.


Vistara declined to comment on the issue. 


All the three listed airlines – IndiGo, Jet Airways and SpiceJet made a profit in FY17.  Vistara’s unit costs were much higher compared to its peers in FY16 and airline’s outgoing chief executive officer Phee Theik Yeoh had indicated that steps would be taken to reduce it. Unit cost refers to cost incurred in transporting a passenger per kilometre.


“Typically low cost airlines take 3-5 years to break even and for full service years, it takes longer than five years,”  aviation consultant Mark Martin said.


“ The increase in loss for Vistara is incremental in nature. Revenue has doubled but losses have not grown in that proportion indicating that the airline has been able to reduce its unit costs. The airline should optimise its costs further as it looks to induct wide body planes and expand aggressively,” Martin added.


The airline is likely to order over 100 planes including a mix of narrow body and wide body jets for its overseas plans and is advancing the induction of 20th aircraft to next March. 


The airline recently received Rs 200 crore, its second tranche of funding from the promoters. With this, the total investment by the promoters stands at Rs 1,200 crore. The promoters had originally committed Rs 600 crore funding while setting up the airline in 2013. 



Source : business-standard.com

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