New Delhi, Dec 23 (IANS) Global ratings agency Fitch Ratings on Wednesday came out with a healthy earnings outlook for Indian airline sector in 2016.
The bullish outlook for the Indian airline sector was disclosed in the global ratings agency’s report — ‘Improved Earnings Outlook Likely for Indian and South-East Asian Airlines.’
According to the report, the earnings outlook for Indian and south-east Asian airline sectors should improve on the back of higher demand, lower fuel costs and ongoing industry restructuring.
“Macroeconomic growth should help bolster demand and top-line growth for the region’s airlines, and data so far in 2015 is already showing strong demand growth,” the report said.
Besides, the report pointed-out that continued decline in global oil prices will provide a much-needed boost to airlines’ earnings.
In addition, industry consolidation and restructuring should result in improved profitability, the report said.
Nonetheless, the report cautioned on aggressive competition and capacity expansion which remain key risks for the sector over the longer term.
“Capacity growth in south-east Asia and India has slowed in 2015 as airlines focused on profitability, but a huge order book for new aircraft remains, which could make it difficult to improve profitability for the sector,” the report cited.