Airline stocks zooming up

Airlines stocks are zooming up after crude oil prices remained low. Though yesterday it had faced one of the biggest sell-off this year, coming down to a two-month low, following the crisis in Greece, today it is steady at $570.7/barrel.

This news apart, the market remains enthused with the Govt reducing jet fuel prices on 30th June which become effective from 1st July. It reduced the jet fuel prices by Rs 2086.56 per kiloliter or 3.91% to Rs 51267.36 per liter in Delhi, with corresponding price revision in other states. The revised jet fuel prices took effect from 1 July 2015.

Jet fuel cost comprises 50% of any airline company’s total operating cost, indicating the impact of a price reduction it could have on the profit margins. With airline companies not really reducing rates but enjoying the benefits of lower oil prices, the market is hopeful of good numbers coming in this quarter too.