The Hindu Business Line : Fall in ATF prices pushes up airline stocks

Mumbai, Sept. 1 Airlines’ stocks rose on Monday on the back of 16 per cent reduction in aviation turbine fuel prices (ATF) announced by oil marketing companies on Sunday.

The share prices of Jet Airways, SpiceJet, and Deccan Aviation surged two to four per cent reacting to the positive news for the sector, otherwise reeling under pressure of high cost of oil.

“The primary reason for the jump in aviation stocks was the reduction in ATF prices announced yesterday (Sunday).

Also, if the prices hold at current levels it would mean a saving of five to seven per cent in the operating cost of the airlines which is the difference between their (making) losses and profits,” said Mr Sandeep Shenoy, Strategist, Pioneer Intermediaries.

Oil consumption

Another market analyst from an Indian brokerage said, in the domestic sector alone, airlines’ oil consumption is 350-400 crore litres per annum. “SpiceJet’s consumption of ATF per month is two crore litres, this reduction would means a straight saving of Rs 24 crore every month. Similarly, for Jet this means a saving of Rs 60 crore in its monthly fuel bills.”

On Monday, Deccan Aviation stock led this upward movement as it gained 4.47 per cent to close at Rs 82.90 against previous day’s close. With effect from last Friday, Deccan has been changed to ‘Kingfisher Red’, now to be operated as low-cost arm of United Breweries owned Kingfisher Airlines.

The change came in more than a year after UB acquired a controlling stake in Captain G.R. Gopinath owned low-cost carrier.

Meanwhile, Jet Airways share closed at Rs 486.45 on Monday, a gain of 2.97 per cent over the previous close.

SpiceJet stocks gained 2.20 per cent to close at Rs 27.90 on Monday.

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