Jet Airways gains for second session post ATF price cut

MUMBAI: Shares of airline company Jet Airways surged higher for the second straight session after the oil marketing companies slashed aviation turbine fuel (ATF) prices.

ATF price in Delhi is down by Rs 7,520.52 per kilolitre, or 12.5 per cent, to Rs 52,422.92 per kl.

"Reduction in ATF prices would result in substantial reduction in losses of domestic airline companies such as SpiceJet, Jet Airways and Air India; it will be sentimentally positive for Jet Airways and SpiceJet," said Sharekhan report.

Jet fuel constitutes over 40 per cent of an airline's operating costs, and the price cut will ease the financial burden on cash-strapped carriers.

For airline operators, every 10 per cent drop in ATF prices results in 300-400 bps improvement in EBITDA margins.

According to analysts, cash-strapped airline companies are unlikely to pass on the benefit of the price cut to passengers.

This is the possibly the steepest cut in rates since ATF pricing was deregulated or freed in April 2002.

Sandeep Wagle, Founder & CEO, Power My Wealth, said he was bullish on the stock.

"Traders can buy the stock with a stop loss of Rs 406 for target of Rs 455," he said.

At 11:15 a.m.; Jet Airways was trading at Rs 440.30, up 5.06 per cent, on the BSE. It rallied 5.94 per cent to touch an intraday high of Rs 444.