Airline stocks surge on FDI hope

Move expected to provide relief for ailing industry

Mumbai, June 6:

Airline stocks surged on both the NSE and the BSE on expectation of a favourable decision on FDI in aviation.

Kingfisher Airlines gained 17.3 per cent to Rs 12.46. Similarly, SpiceJet and Jet Airways stock went up 6.54 per cent and 5.55 per cent respectively on the BSE closing at Rs. 31.75and Rs.334.95.

Trading volumes have also seen significant increase. The total traded quantity on Wednesday for KFA doubled from a two-week average quantity of 54 lakh shares to 112.66 lakh shares. For Jet Airways, it went up from a two-week average of 3.01 lakh shares to 6.64 lakh shares; SpiceJet saw a volume of 84.82 lakh shares, up from a two-week average of 48.81 lakh shares.

Kingfisher registered its all-time low of Rs 10.05 on June 1.

Aviation analysts told Business Line that the Government's decision to allow foreign airlines to invest in domestic carriers would be positive news for the aviation sector.

Stake buy

The Minister of Aviation, Mr Ajit Singh, said on Wednesday in New Delhi that he was in talks with the coalition partners of the Government to agree on a decision on allowing foreign airlines to buy stakes in local carriers.

The move is expected to bring in relief for the ailing aviation industry. Running a truncated schedule, debt-laden KFA had posted 10 straight quarterly losses due to high fuel costs and tough price war.

Kingfisher's fourth-quarter loss widened to Rs 1,152 crore in the three months ended March 31.

Losses for Jet Airways increased 140 per cent in the fourth quarter of 2011-12 to Rs 298 crore. Similarly, SpiceJet reported over four-fold rise in net loss at Rs 249 crore during the same quarter

http://www.thehindubusinessline.com/todays-paper/tp-markets/article3498572.ece