If one were to look at airline shares, it would seem as if happy times are just round the corner.
The Kingfisher share started flying earlier this week even before the airline’s grounded fleet was given the go-ahead to bring it out of mothballs. Jet and SpiceJet shares are now quoting at three times their 52-week lows, and they are just 10-15 percent below their 52-week peaks.
It is the job of the market to discount the future, but this time they may be discounting it with unnecessary abandon.Shares went up on every false signal – when the government said that it would allow airlines to import jet fuel directly; when 51 percent FDI was permitted in aviation; when anonymous source-based news appeared that Jet was close to a deal with Etihad for a stake sale; and even when Kingfisher claimed to be talking to Etihad; or, more recently, when Kingfisher presented a watered-down revival plan to the Directorate-General of Civil Aviation for allowing to fly again.
26/12/12 The Business Blog/First Post
