Mayday! Jet Airways, SpiceJet, Indigo on hotbed; massive ATF price cut fails to cheer aviation stocks

Indian airlines are in the middle of a crises currently! A massive cut in Aviation Turbine Fuel (ATF) prices yesterday was expected to help them, but that did not help. For major airlines like Jet Airways, SpiceJet and Interglobe Aviation (Indigo), the fuel purchase bill suddenly came down to under Rs 10,000. ATF price has been a big cause of concern in 2018 for these three airlines as massive expenses took a toll on earnings over the past few quarters. Almost every airline has blamed rising ATF prices - something that can be blamed on boiling international crude oil prices. However, now tables have turned as crude oil price has eased and OMCs have the chance to trim down costs. 

Interestingly, the new year kicked off with ATF prices down between by Rs 9,000 to just over Rs 10,000 in metro cities like Delhi, Mumbai, Kolkata and Chennai. But shockingly, the ATF price cut, which was supposed to give a breather to aviation stocks on exchanges, has provided almost no help as investors continue to indulge in panic selling. 

Today, the share price of SpiceJet has plunged by nearly 4% with intraday low of Rs 87 per piece before ending at Rs 87.80 per piece down by 2.71% on BSE.

Surprisingly, it was Jet Airways share price which took the most beating among its peers, as it dropped by almost 7% on BSE with an intraday low of Rs 261.50 per piece. However, the airline finished at Rs 263.20 per piece down by 6.16% on the index. 

On the other hand, the impact in Interglobe share price was quite low compared to its rivals Jet Airways and SpiceJet. Indigo gave away nearly 1% after touching an intraday low of Rs 1,155 per piece. However, it managed to end at Rs 1,162.15 per piece,  down by 0.36%. 

From January 01, these three airlines' ATF purchases for per kilo liter has come down by Rs 9,990 in Delhi, Rs 9,837.37 in Kolkata, Rs 9,962.25 in Mumbai and Chennai by massive Rs 10,195.13. 

Now these airlines will pay for per kilo litre of ATF Rs 58,060.97 in Delhi, Rs 63,556.18 in Kolkata, Rs 58,017.33 in Mumbai and Rs 59,021.48 in Chennai. 

In December 2018 month, the ATF price was seen at Rs 68,050.97 in Delhi, Rs 73,393.55 in Kolkata, Rs 67,979.58 in Mumbai and Rs 69,216.61 in Chennai.

ATF costs has been the major reason to why airlines posted lackluster earnings in Q2FY19. Indigo’s fuel cost rose by a whopping 84.3% in Q2FY19, whereas Jet Airways witnessed 54.9% and that of SpiceJet saw only 4% increase.

Looking at the carnage in the markets, the ATF price cut, which was supposed to restore investors' faith, has failed to cheer them.