Equity Alert: Airline shrs down as outlook weak on mounting losses

[K.Karthik Raja]

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Equity Alert: Airline shrs down as outlook weak on mounting losses
MUMBAI--11:30AM--Shares of Spicejet were down 4.3% at 29.95 rupees
on BSE
amid weak outlook for the sector due to mounting losses, said dealers.
However, Jet Airways was down only 0.2% at 539 rupees, as the
airline can
mitigate some of the impact of rising fuel prices by sourcing fuel for
international operations from overseas, where jet fuel prices are 70%
lower,
said analysts.
Jet Airways intends to increase the share of revenue from
international
operations to 50%, against 35% now.
"It is a sorry situation for airlines. They are beaten down by
mounting
costs which they are unable to pass on without taking a hit on their
topline," said another analyst with a Mumbai-based international fund
house.
He said outlook for the entire sector look "extremely weak", and
it was
"not advisable" to put one's money in airline stocks.
Recently, Jet Airways Chairman Naresh Goyal said airlines in India
are
expected to report losses of about $2 bln for this financial year due
to high
cost of fuel, which constitutes 40-45% of their total operational
cost.
Monday, Civil Aviation Minister Praful Patel also expressed
concern
about the financial health of airlines in wake of soaring global crude
oil
prices.
He said states are as yet unrelenting on cutting sales tax on
aviations
turbine fuel.