Despite mounting losses quarter-after-quarter, the listed airlines – Jet Airways, Kingfisher Airlines and Spice jet – have seen renewed investor interest in their stocks in recent times. While the Bombay stock exchange’s 30-share Sensex has risen only 11.55 per cent in the last one month, Jet Airways , Kingfisher Airlines and Spice Jet have seen a 50.47 per cent, 36 per cent and 61.82 per cent jump in their share prices in the period. On Thursday, Jet Airways jumped 5.52 per cent to Rs 59.25 on the BSE.
The main reasons for market men’s sudden increased appetite for the shares of the airlines are the cut in aviation turbine fuel this week, rise in passenger occupancy levels and the possibility of a turnaround in the current quarter , state-run oil marketing firms has on Monday cut jet fuel price by 1.10 per cent .Following this, ATF prices in Delhi have come down by Rs 455 to Rs 39,968 per kilometer while in Mumbai it is down by Rs 474 to Rs 41,237 per kilolitre.
“Jet fuel is the largest component of costs for air carriers and accounts for almost 40 per cent of operational costs. Crude prices have been almost stable, hovering around $80 per barrel and is not expected to suddenly rise. This has acted as a big sentiment booster for market men to make purchases in these two counters,” said Anand Rathi Financial Services vice president DD Sharma.
There is an overall bullish sentiment across the market backed by the robust GDP numbers which is another reason for a renewal of interest in the aviation sector.” Things are looking good at the moment as business travel is again picking up. On the back of encouraging GDP numbers, corporate are loosening their purse strings and are willing to spend a little more which is helping us to get better occupancy,” said the spokesperson of one of the airlines requesting anonymity.
“Occupancy rates have also been better because of the three long weekends in the last two months. During that period demand went up by around 25 per cent. December being the peak tourist season we are expecting better inflow of tourists – both domestic and international – however, yield still remains a concern for us. We are hoping that the coming months will be better with the economy again looking to be going on a higher growth trajectory,” he said.
Market men are also hoping that the present rise in share prices will give the companies some bargaining capacity in case they want to approach institutions to raise funds through QIPs (qualified institutional placement).
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