Airline stocks jump up to 9% on 10% cut in jet fuel prices
NEW DELHI: Aviation stocks are on cloud nine with the old listed companies – Jet Airways and SpiceJet – touching a five-year high and newly listed IndiGo touching a life high on Friday.
The fresh highs came as oil companies cut jet fuel prices by 10%, a move that will boost profitability of airlines.
Jet Airways closed 8.3% higher at Rs 760, after touching an intra-day high of Rs 778. SpiceJet closed 9.4% higher at Rs 82, after touching an intra-day high of Rs 86. These two airlines had last seen these levels in January 2011.
InterGlobe Aviation, which runs low-cost IndiGo and was listed on November 10, 2015, closed 8.7% higher at Rs 1,341, after touching an all-time high of Rs 1,395 during the day.
While aviation stocks have been on an upswing for the past few months, Friday’s New Year boost came due to the sharp cut in oil prices on the same day. Now, aviation turbine fuel (ATF) or jet fuel is at a multi-year low of Rs 39,892 per kilolitre in Delhi, which was last seen in September 2010. The highest-ever level was in October 2013 at Rs 77089. In 2015, Jet stock gained 82.8% and SpiceJet stock rose 338%.ATF accounts for almost half of an Indian carrier’s operating cost as jet fuel prices here are among the highest in the world. “Low jet fuel price last year has meant we have been able to offer almost 25% to 30% lower fares than 2014 levels. Due to this, domestic air travel is growing in the range of 20% to 30%. This has led to stronger cash flows and improved profitability for airlines,” said an airline official.
Read full article: TOI
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