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SpiceJet Jumps 13.5% After US Ends Ban On Boeing 737 MAX Flights; Up 28% In 2 Days

By Staff
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Shares of SpiceJet Limited rose as much as 13.5 percent to Rs 75.4 on Thursday after the Boeing Co won approval from the US Federal Aviation Administration to fly its 737 MAX jet again after two fatal disasters.

SpiceJet Jumps 13.5% After US Ends Ban On Boeing 737 MAX; Up 28% In 2 Days
 

The approval comes after nearly two years of scrutiny, corporate upheaval and a standoff with global regulators. The FAA detailed software upgrades and training changes Boeing must make in order for it to resume commercial flights after a 20-month grounding, the longest in commercial aviation history.

The 737 MAX flights crashed in Indonesia and Ethiopia killing 346 people within five months in 2018 and 2019, triggering multiple investigations.

SpiceJet has 13 of these planes in its fleet and have been grounded since 2019. The stock has gained 28.4 percent since Wednesday when it gained due to an upgrade in review from HSBC. The global brokerage in its report dated 17 November, upgraded SpiceJet to "buy" from "reduce" and raised target price sharply to Rs 80 from Rs 26.50 as it believes that the budget airline's survival risk has abated and it has reported better-than-expected second-quarter result.

"The company expects 737 Max to return to operations by Q1 2021. Once 737 Max returns to operations, SpiceJet could start receiving incentives as part of the sales and lease back agreement," said HSBC.

"Although it is difficult to speculate, its recent deal to lease two A330 gives us some confidence. Boeing might also provide support as SpiceJet's survival is crucial for Boeing to have a continued presence in India," it added.

Meanwhile, India's aviation watchdog DGCA (Directorate General of Civil Aviation) has said that it will study FAA's decision and take "some time" before taking a final call on allowing Boeing 737 MAX planes to fly again in the Indian skies.

Read more about: spicejet boeing
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