Mumbai: The strengthening of rupee against the dollar in the last month will improve operating profits of domestic airlines, according to Bank of America Merrill Lynch (BOAML) analysis. Rupee has appreciated approximately six percent versus the US dollar over the past five weeks. Airlines stand to benefit since significant portion of domestic airlines' costs are in US dollars.
The BOAML analysts estimate that each one percent appreciation in rupee will improve Jet Airways and SpiceJet's earnings before interest, tax, depreciation, amortisation and rentals (EBIDTAR) by 0.4 percent and 1.8 percent respectively in current financial year.
Appreciating rupee will have an indirect impact on price of aviation turbine fuel, the report says. State oil marketing companies cut aviation fuel prices by 4.3 percent earlier this month the first such reduction since June.
For FY 2012 Jet Airways and SpiceJet posted a EBIDTAR of Rs 1168 crore and Rs 83 crore respectively. However both these airlines posted huge losses due to rising fuel costs and depreciating rupee. Fuel costs account for 30-40 percent of domestic airlines' operating expenses and carriers were hit hard by both these factors.
13/10/12 Aneesh Phadnis/Business Standard
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The BOAML analysts estimate that each one percent appreciation in rupee will improve Jet Airways and SpiceJet's earnings before interest, tax, depreciation, amortisation and rentals (EBIDTAR) by 0.4 percent and 1.8 percent respectively in current financial year.
Appreciating rupee will have an indirect impact on price of aviation turbine fuel, the report says. State oil marketing companies cut aviation fuel prices by 4.3 percent earlier this month the first such reduction since June.
For FY 2012 Jet Airways and SpiceJet posted a EBIDTAR of Rs 1168 crore and Rs 83 crore respectively. However both these airlines posted huge losses due to rising fuel costs and depreciating rupee. Fuel costs account for 30-40 percent of domestic airlines' operating expenses and carriers were hit hard by both these factors.
13/10/12 Aneesh Phadnis/Business Standard
