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Aviation stocks gain as OMCs slash ATF prices by 1.38%

Published: Friday, December 16, 2011, 13:31 [IST]
 
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Aviation stocks gain as OMCs slash ATF prices by 1.38%

The silver lining for cash strapped aviation stocks emerged out gradually after the state run oil marketing companies (OMCs) on December 15, 2011 slashed jet fuel prices by 1.38 per cent or Rs 833 per k/l, as the international prices of ATF too eased. State-run OMCs revise ATF prices on every 1st and 16th of the month based on the average international crude oil price during the fortnight.

Cheering the development, shares of Kingfisher Airlines, rose as much as 3.3 per cent at start, while at 10:47 AM, it quoted at Rs 23.10, up 1.09 per cent from previous close on BSE.

Following the price cut, aviation industry would take a breath of relief as it reels under the mounting losses owing to high cost of jet fuels. Also the sentiments were boosted by recovery in rupee against dollar, which would also help easing the import costs.

On the similar path, jet airways surged as much as 3.3 per cent during the early morning trade, while at 10:48 AM, it quoted at Rs 222, up 1.95 per cent from previous close on BSE.

The ATF cost accounts for nearly 50% of the operating cost of any airline and its prices also vary from state to state due to differential taxes levied. Also jet fuel prices have increased by 30 per cent since December 2010, and borrowings have risen to all time high.

Dion Global Solutions Ltd

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