Higher utilisation, yields in busy season to
also benefit carriers in near term
Mumbai, Oct 12:
Airline companies will benefit in the near term
from an appreciating rupee, temporary shutdown of Kingfisher, capacity
discipline and improvement in utilisations and yields due to the onset of the
busy season, according to a report by Bank of America Merrill Lynch.
“While we expect a weak second quarter of FY13
results on account of seasonality, we could see a sharper-than-expected
recovery in the seasonally strong third quarter,” the report added.
The rupee has appreciated six per cent against
the dollar over the past five weeks. The report said that a significant portion
of domestic airlines’ costs are dollar-denominated and each percentage point
appreciation in the rupee improves the FY13 EBITDA by 0.4 per cent and 1.8 per
cent for Jet Airways and SpiceJet, respectively.
Shutdown
The temporary shutdown of Kingfisher Airlines (3
per cent market share) is another marginal positive for the other carriers as
this further consolidates the industry and eases supply prior to the busy
season, the report highlighted. Additionally, the show-cause notice by the
aviation sector regulator puts a question mark on Kingfisher’s return.
“We do not expect Kingfisher to normalise its
operations in the near term. Despite Kingfisher’s temporary shutdown, none of
the carriers are rushing to add capacity,” the report added.
Indian carriers are not renewing expired leases.
They are also sub-leasing aircraft in order to keep the capacity under check.
“As per our channel checks, over the next 3 months, we expect addition of 5-6
aircraft, most of which will be utilised in the underserved international
routes,” the report noted .
http://www.thehindubusinessline.com/todays-paper/tp-logistics/article3992447.ece
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