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Our Bureau

Mumbai, Oct. 15 As the Sensex tanked 5.8 per cent on Wednesday, the three listed aviation stocks nosedived 8 to 15 per cent.

Marketmen attributed this to the overall conditions in the aviation industry and the lack of clarity regarding the code-sharing deal between Jet Airways and Kingfisher Airlines.

Jet Airways was down 7.58 per cent to close at Rs 267.45; Kingfisher Airlines closed lower by 10.97 per cent at Rs 44.65.

“Though the alliance between the two carriers will rationalise costs there still isn’t enough clarity on how much each will save on operating costs or how much it will help their bottom lines,” said an aviation analyst at a stock broking firm.

Further clarifications from these two airlines would be necessary for proper valuation of these scrips, he added.

Jet Airways laying off of more than 800 of its “unconfirmed and probationary personnel”, in accordance with its scaled down winter expansion plans, could not have led to a fall the scrip, analysts said. “This is the third time Jet has laid off employees in recent months. This alliance was formed to rationalise costs, so excess capacities have to be reduced to reduce costs,” said the head of research at a brokerage.

Spicejet, too, fell 14.49 per cent on Wednesday to close at Rs 14.75.

The general market sentiment, too, which saw the Sensex fall 674 points, was part responsible for dragging down airline stocks, as was profit booking.

“The aviation stocks have had a good run in the past few days. Investors are now looking at every possible place to make profits, there was a fair amount of profit booking that place in the aviation stocks today,” said an aviation analyst, who works for listed domestic brokerage.

The three aviations scrips had gained between 30 per cent and 54 per cent over the last three trading sessions. In the last month, the share price of Jet Airways fell 47.69 per cent, Kingfisher Airlines declined 42.94 per cent and Spicejet lost 41.47 per cent.

The aviation industry on the whole has been affected by high fuel prices, reduction in traffic, and the global financial turmoil, said analysts. A statement by Jet Airways said that India’s $6-billion aviation industry is expected to lose $2 billion in 2008-09.

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