Airline stocks have started taking off on the bourses again in a clear indication that the aviation sector is in a rebound mode.
Airlines like Jet Airways, Kingfisher Airlines and Delhi-based low-cost airline SpiceJet all have performed well in the past few days compared to their all-time low performance in March this year. Sectoral analysts say improving load factors, stable aviation turbine fuel (ATF) costs and better yields are driving the sector in the positive territory.
Jet Airways, which reached an all-time low at Rs 115.25 on March 12, 2009, closed at Rs 534 on Tuesday on the BSE. The stock reached an all-time high of Rs 605.95 on December 3. Kingfisher?s share price is also heading northwards, with its shares closing at Rs 56.50 on Tuesday, compared to an all-time low of Rs 24.40 on March 9 this year. In June this year, its stock peaked at Rs 73.45. SpiceJet also has a reason to cheer as its stock closed at Rs 51.85 on Tuesday. Its share price peaked at Rs 59.40 on December 4 and had dipped to an all-time low at Rs 11.90 in Jan this year. Says Ambareesh Baliga, vice-president at Karvy Stock Broking Ltd, ?The aviation sector has become optimistic due to the improvement in load factors of various airlines in the current financial quarter of FY 2009-10. The aviation turbine fuel (ATF) cost has also stabilised at $70-$80 a barrel. Last year, the loads had dipped due to the recession and the sector had to take a hit in its topline.?
He further added that in the previous financial year, airlines’ fleet were idle and hence the fleet utilisation was low. Now, there is a positivity in the horizon with traffic picking up. Also, the fares are high but the demand for air travel has not dipped which results in better yields for the airline operator.
Says Ajay Parmar, head ? institutional research, Emkay Global Financial Services, ?With the economy inching towards recovery, there is a sentiment that airline financials would also improve. Hence the stocks are gaining momentum on the BSE.?