Wednesday, August 08, 2018

Erosion in air-carriers’ financials not comforting for investors: Kotak report

Mumbai: The financials of the leading Indian airline companies have deteriorated sharply over the past two quarters as the companies have struggled to raise prices to match the increase in input (ATF) costs. According to a report by Kotak Institutional Equities, the costs have jumped sharply led by steep increase in global crude oil and ATF prices and the sharp depreciation in the rupee.

“Significant erosion in spreads is not very comforting for investors (and passengers) The spreads of the leading Indian airline companies (IndiGo, Jet Airways and SpiceJet) have collapsed over the past two quarters resulting in very weak financials for the companies,” the report said.

“Inability of the industry to raise prices to offset increase in input costs is quite surprising We are surprised by the continued softness in yields of the listed Indian airline companies despite strong growth in domestic passenger volumes,” it added.
07/08/18 Business Line