Akasa Air, India’s newest airline, more than doubled its net loss in FY24 as higher expenses towards expanding its network outweighed robust revenue growth.
The budget airline posted a net loss of INR 1,670 crore in FY24 compared with a INR 744.5 crore net loss in the previous year, showed the company’s first filings with the Registrar of Companies (RoC).
Revenue grew more than fourfold to INR 3,069.58 crore from INR 698.67 crore in FY23.
It was the first full-year results for late stock market investor Rakesh Jhunjhunwala-backed SNV Aviation which started operations in August 2022 under the Akasa Air brand.
Asked about the losses, Ankur Goel, chief financial officer, told ET that an airline takes a few years to stabilise before it breaks even. However, “our capacity tripled this fiscal year, leading to a 10 percent increase in Revenue per Available Seat Kilometre (RASK). This growth reflects improvements across the board at Akasa, ensuring RASK rises annually.”
This fiscal, Goel said, “RASK will continue to rise annually as our internal capabilities, brand presence, and airport visibility grows.”
He said the airline’s fleet capacity will increase by 50-55 percent in FY25, boosting revenue by about 50 percent.
Total expenses last fiscal climbed more than threefold to INR 4,814.4 crore from INR 1,522 crore in FY23.
Goel said the company invested heavily in areas such as fleet expansion, brand building, and fresh hirings including pilots which inflated expenses.
Interest and other finance costs rose nearly threefold to Rs406.1 crore from INR 141.18 crore. This was due to higher aircraft lease obligations and accounting standards, said Goel.
Employee benefit costs rose to INR 774.9 crore in FY24 from INR 232.4 crore as the airline hired 1,400 employees during the year to expand its workforce to 3,800 employees.
“The company is also focusing on ensuring adequate liquidity in the business and is working on various initiatives towards this. Considering the future business projections, the management believes that the company will be able to realise its assets and will be able to meet its liabilities at the amounts stated in books and commitments in the normal course of business,” the Akasa Air management said in its annual report for FY24.
As of March 31, the airline operated a fleet of 24 aircraft with over 110 daily flights, serving 21 domestic destinations and one international. This included the launch of flights to Doha on March 28.
The company has ordered an additional 150 aircraft, increasing its total order to 226 Boeing 737-8200 and Boeing 737-10. However, the airline, like many other Indian carriers, are facing aircraft delivery issues with Boeing.
According to an industry expert, delay in aircraft deliveries can impact a relatively new airline like Akasa unlike established airlines. To this, Goel said the airline is “comfortably positioned” at this point of time.
The company anticipates a 50 percent increase in capacity in the future. Although this will raise overall expenses, the increase in costs is expected to be less than 50 percent due to efficiencies of scale. As a result, the unit cost per available seat kilometre (CASK), which has already decreased by 20 percent, is projected to continue declining, enhancing cost efficiency and supporting profitability in line with the capacity expansion, Goel said.
