SpiceJet Stock Surges 9%, IndiGo Reports 42x Rise in Net Profit

SpiceJet benefitted the most from the slots vacated by the grounded Jet Airways

Highlights
  • SpiceJet benefitted the most from the slots vacated by the grounded Jet Airways
  • IndiGo reported a 42-fold surge in net profit at Rs. 1,203 crores

The stocks of SpiceJet rose higher for the seventh consecutive session, increasing 9% intra-day, at Rs. 144 for a unit on BSE. Last week, the budget airline’s share rallied 23% as against a percent increase in the benchmark index.

SpiceJet benefitted the most from the slots vacated by the grounded Jet Airways. The airline managed to capitalize on the same parallel to its operations on some of the highly competitive metro routes. In the quarter ended on June 2019, the market experts estimate SpiceJet to post six times year-on-year jump in net profit at Rs 154 crores. The airline registered a profit of Rs. 25 crores in a year-ago quarter.

Spicejet

Meanwhile, the share price of Jet Airways and InterGlobe Aviation (the parent company of IndiGo), tanked 20% and 6% respectively last week. The feud between Indigo promoters resulted in tainting the brand image of IndiGo and may impact the growth rates and valuations of the company in the long run.

IndiGo announces 42X rise in net profit

However, as of today, IndiGo reported a 42-fold surge in net profit at Rs. 1,203 crores in the quarter ended June 2019 as against Rs. 27 crores it posted in the same quarter a year ago. The airline attributed higher sales and improved margins, coupled with softer jet fuel price for the win this quarter. Sales jumped 42% in the June quarter to ₹9,420 crore from the comparable period a year ago.

IndiGo is currently controlling half of the air travel market at 49%, carrying about 6 million passengers in May 2019.

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If the dispute between IndiGo’s founder Rahul Bhatia and his estranged partner Rakesh Gangwal is not settled quickly, it may dent investor confidence, delay decisions on crucial issues, invite avoidable regulatory attention and force the carrier to cede space to rivals. Analysts say that as capacity increases in the airline industry, competition is set to intensify, bringing the airline’s profits under pressure.

Ria is a lead news writer at Aviation Scoop. She writes from dawn to dusk, reads in the evenings, and draws at some ungodly hours. She loathes human interaction, and finds solace in the sweet, musky smell of old books, and rain. Find her on Twitter here - @rialakshman.

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