Aviation stocks cruise high

Aviation stocks have taken off. Jet Airways is amongst the top 3 gainers currently on the BSE, up almost 9.5% at Rs.352 levels and this is after hitting a new high at Rs.354. Spicejet is also cruising high, up around 14% at Rs.20.75, with an intra day high at Rs.21.40, which is quite close to its 52-week high of Rs.22.20.

These stocks are up as the much awaited cut in Aviation Turbine Fuel (ATF) happened. It has been reduced to Rs.59.943/kiloliter, effective from today. The price has come down 11.22% down since Oct and over the next couple of months, more price cuts are expected as price of international oil is estimated to fall. Post this current price cut, it is expected that aviation companies might save around Rs.1200 crore in fuel bill in H1FY15. With 30-40% of an airlines income being eaten away by fuel cost, these price cuts will help shore the margins and we can expect to see the companies posting much better numbers in second half of current fiscal.