SpiceJet shares rally 50% and IndiGo surges 29% during November recovery

SpiceJet Ltd’s stakes surged nearly 50 percent while Indigo’s stakes rallied 29 percent in November till date after Directorate General of Civil Aviation’s data showed continued recovery in domestic passenger traffic.

Since November 1, SpiceJet has surged 50.30 percent while InterGlobe Aviation Ltd’s stakes have raised by 28.75 percent. SpiceJet’s shares were trading at Rs 75 on BSE, up by 13% from its previous close while Indigo fell by 1% to Rs 1,685 as recorded at 11.30 am. Indian airlines carried a total of 5.27 million passengers in October against 3.94 million passengers in September.

Boeing 737 Max planes, which have been grounded since March 2019, are all set to fly again as US aviation regulator Federal Aviation Administration (FAA) approved the ‘return to service’ of the aircraft with extensive fixes on Wednesday.

“The higher capacity of 737 Max (220 seats versus 180 in 737NG) along with greater fuel efficiency will boost SpiceJet’s competitiveness,” Edelweiss Capital said.

Data suggest that key factors that favour aviation companies are an expected growth outlook over the next three years, improvement in capacity utilization in the coming months with easing lockdown provisions, market share gains, steady generation of cash-flow and benign crude prices, along with a cost-benefit advantage over railways.

Hopes of a vaccine launching earlier than expected has also lifted the hopes of the investors assuming that it may help life return to normal soon globally.