Vistara Narrows Losses In FY21 Despite Pandemic Woes

After five years of growing losses, Vistara has managed to turn the tide by a little bit. The fiscal year 2021 saw the airline’s net losses fall 11% to ₹1,612 crores ($220.9mn). This comes despite aviation’s worst year on record, with flight groundings and negligible international travel. Let’s find out how this happened.

Vistara’s operating losses grew in FY2021 as the industry suffered its sharpest blow ever. Photo: Airbus

Saved

According to Business Standard, Vistara has reduced its net losses in FY21 to ₹1,612 crores ($220.9mn), down from ₹1,814 crores ($248.5mn) in FY20. However, this reduction was not due to the airline bringing its costs down, with operating losses rising, but rather due to foreign exchange gains.

This meant Vistara offset its operating loss thanks to a stronger rupee, allowing it to control foreign exchange losses on dollar payments. Overall, the carrier’s net loss was 11% lower between 1st April 2020 to March 31st, 2021 (FY21). Any relief during this pandemic will be welcome for Vistara, which has seen its plans derailed.

Vistara took delivery of its first two 787-9 Dreamliners last year but can only fly them on a handful of routes. Photo: Vistara

Unsurprisingly, revenue took a sharp hit during this period too. Vistara’s revenues fell 52% last fiscal year to ₹2,243.5 crores ($307.3mn) after a two-month grounding of all passenger flights and a slow recovery toward a full domestic recovery.

Still challenging

This year’s financial report still leaves Vistara financially vulnerable and deep in debt. While net losses are down, they remain far higher than those seen in 2018-19. FY19 saw Vistara’s losses at ₹831 crores ($113.8mn), which means FY21’s figure remain two times higher.

Vistara’s sharp rise in loss is largely due to operational expenses from 2019 onwards. The carrier has added dozens of new aircraft, routes, and staffers to cater to its vast domestic and international expansion. The delivery of two new 787-9s and new long-haul international routes have all weighed down the airline at a time with low passenger demand.

Vistara is pushing back deliveries of A320s, A321s, and 787s due to the current market climate. Photo: Vincenzo Pace | Simple Flying

However, even with big losses, there isn’t much doubt about the future of Vistara. The carrier is backed by the Tata Group (51%), one of India’s largest conglomerates, and Singapore Airlines (49%), the well-funded flag carrier. The pair have been steadily infusing funds since last year, ensuring operations remain unhampered.

Always tough

Running a full-service airline in India is undoubtedly a challenge of resilience. With low fares, intense competition, and razor-thin margins, Vistara’s edge has always been international flights and a slice of domestic premium passengers. With the pandemic hampering both of these segments, losses are unsurprising.

However, this has not stopped Vistara from preparing to bounce back in the future. The carrier has already received the green light to fly to the US after starting services to London, Frankfurt, and Tokyo during the pandemic. For now, the carrier is slowly growing its operations and planning a huge expansion as soon as borders reopen and traffic rebounds.

What do you think about Vistara’s financial situation? Let us know in the comments!

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