Policy must to ensure airlines maintain 4-6 months of cash reserves: CAPA

Indian airlines industry will continue to be sick unless there are policies in place to ensure that the operators have at least 4-6 months of cash kept in reserves for continuity of operations, according to global consultancy and aviation firm CAPA. CAPA said it estimates the domestic airline industry could post losses to the tune of USD 1.4-1.7 billion or more losses this fiscal. The two listed airlines, IndiGo and SpiceJet, have already reported losses of Rs 1,064.30 crore and Rs 789 crore, respectively, in the April-June quarter of the current fiscal. Financial fitness is a fundamental criterion of operating (globally)India is the only country where technically insolvent companies can expand, can continue to operate, Kapil Kaul, CEO for South Asia at CAPA, said at an industry event in Mumbai recently. He said going by the global practice, the airlines have to ensure that they have at least 4-6 months of cash reserves when no revenue is coming in while their air operator permits

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