Airline stocks soar on aviation FDI policy changehttps://indianexpress.com/article/news-archive/web/airline-stocks-soar-on-aviation-fdi-policy-change/

Airline stocks soar on aviation FDI policy change

Bull Run: Kingfisher stocks see maximum rise at 60.88% in two weeks,SpiceJet gains; Jet Airways falls

The very announcement of the government’s decision to allow foreign airlines to invest in domestic carriers has sent the stocks of Kingfisher Airlines and SpiceJet soaring,the exception being Jet Airways that has seen its stocks decline.

The biggest gainer among the three listed Indian carriers is Kingfisher Airlines,whose stocks went up by 60.88 per cent from Rs 10.02 on September 13,to Rs 16.12 on September 28.

During the same period,the value of SpiceJet stocks rose by 12.25 per cent to Rs 37.10. Jet Airways’ stock fell 4.35 per cent during the period and closed at Rs 345.55 on Friday.

The government’s relaxation of the FDI policy in aviation is seen as a major boost for the aviation sector.

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Kingfisher,SpiceJet and GoAir are likely to get foreign partners,which will help them financially and give access to the large network and operational efficiencies of the international carriers.

Jet Airways and IndiGo have not been in favour of the policy relaxation.

Analysts say that the rise in stock value has been largely fuelled by the government’s announcement.

“Jet has lost its stock value in recent times,as it has not shown interest in getting a foreign partner whereas the other two airlines have shown interest in getting foreign partners. The stock values are up on sentiments,as the finances of the aviation companies are still strained,” said Mahantesh Sabard,senior analyst at financial services firm Fortune Equity India.

Sabard further said that the operating cost during the second quarter of the current fiscal are higher and is likely to impact finances of the airlines.

“The cost of jet fuel for the second quarter is around 19 per cent higher compared to the same quarter last year,” he added.

Cost of jet fuel constitutes around half of the operating cost of domestic carriers and any increase in jet fuel cost impacts them hard.