Jet up 3% on ATF price cut by 11.6%, 2nd time in 2 month

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Moneycontrol Bureau

Shares of aviation stocks are flying as aviation turbine fuel (ATF) price is slashed by 11.6 percent to Rs 40,591/kl. This is second time ATF price has been cut in last two months. Fuel price was cut by a massive 9.5 percent, or Rs 4,860, to Rs 46,407/kiloLitre in August.

Both Jet Airways and SpiceJet jumped 2-3 percent intraday on Tuesday.

Hovering at around 6.5-year low, weak crude prices have been beneficial for airline companies. Oil prices had already been under pressure last fall when OPEC decided in November to maintain production levels and defend market share rather than cut output to prop up prices.

In Q1, Jet Airways EBITDA was up 5 times as fuel expenses were down 20 percent YoY. Analysts expect further improvement in operational performance in Q2. Low aircraft fuel expenses also aided SpiceJet in posting a stellar April-June quarter. Its aircraft fuel expenses slipped 53.6 percent at Rs 359 crore in Q1 against Rs 773 crore year-on-year. EBITDA, during the quarter, was at Rs 100 crore against loss of Rs 72 crore (Y-o-Y).

At 11:50 hrs Jet Airways was at Rs 341.80, up Rs 4.00, or 1.18 percent while SpiceJet was at Rs 24.60, down Rs 0.20, or 0.81 percent on the BSE.