Saturday, February 08, 2020

Recovering international passenger load factor, benign crude augur well for IndiGo, SpiceJet: ICICI Securities

Recovering international passenger load factor (PLF) and benign crude price present significant tailwinds to InterGlobe Aviation, the parent company that operates IndiGo, and SpiceJet, a report by ICICI Securities said.

According to the report, IndiGo and SpiceJet have the advantage as the crude prices are sub $60 per barrel and the international PLF reached 88 percent for these airliners during December 2019.

Further, the impact of coronavirus on air travel will be limited for IndiGo and SpiceJet as both the airlines have significantly low seat share to mainland China from Indian cities.

The average fare in Q3FY20 grew by 3 percent for IndiGo based on the total December passenger data as international PLF has been recovering for the company.

A significant portion of lower revenue per available seat-kilometre (RASK) reported by IndiGo and SpiceJet in Q2FY20 was due to lower PLF, the brokerage noted.

However, IndiGo managed to grow international PLFs YoY at 84 percent in November 2019 and 88 percent in December 2019 compared to 83 percent and 85 percent in November and December 2018, respectively.

"International PLFs are lower YoY for SpiceJet but has improved significantly. From the lows of 77 percent in September/October 19, international PLF of SpiceJet has improved to 85 percent and 88 percent in November and December 2019," the report said.
07/02/20 Ankit Gohel/CNBC TV18

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