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InterGlobe Aviation hits 17-month high

By
Indigo, Financial Results

Mumbai: Shares of Indigo-owner InterGlobe Aviation moved higher to its 17-month high of Rs 1,206, up 4.4% on the BSE in an otherwise subdued markets. The stock is trading at its highest level since January 2016.

SpiceJet and Jet Airways (India) also gained in the range of 2% to 3%, following slide in crude prices.

Lower crude oil prices benefit aviation companies as jet fuel constitutes over 40% of an airline's operating costs.

Thus far in the calendar year 2017, SpiceJet (up 121%), Jet Airways (up 58%) and InterGlobe Aviation (46%) have outperformed the Sensex, which gain 17%.

Meanwhile, according to JP Morgan, Goods and Service Tax (GST) rate of 5% on airline tickets is 100bps lower than the previous service tax, which is a positive, given industry fears of a potential 12% tax slab earlier. Business class tickets are to be taxed at 12%.

Indigo improved its market share to 41.4% in April with domestic traffic increasing 23% Y/Y. Domestic load factor was 87% in April. The airline plans to increase capacity by 25% in FY18; and is thus likely to gain additional market share, added report.

 

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