Aviation stocks slip up to 6.5% as crude oil breaches $90/bbl mark; SpiceJet hits new 52-week low

On the rising crude oil price, the aviation stocks such as Interglobe Aviation (Indigo) and SpiceJet slipped up to 6.5 per cent on the BSE intraday. Aviation companies are heavily dependent on the oil price movement as Aviation Turbine Fuel (ATF) which is a derivative of crude oil. 

The crude oil on Wednesday, jumped $90 a barrel for the first time in seven years amid tight supply and geopolitical tensions between Ukraine-Russia adding fuel to the overall global oil worry. 

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Individually, Indigo slipped by 6.5 per cent to Rs 1,838.75 per share, while SpiceJet touched a new 52-week low at Rs 57.70 per share, by dipping over 5 per cent on the BSE intraday on Thursday. 

According to a Reuters report, global political tensions have added to worries about an already tight energy market. OPEC+ is having trouble meeting monthly production targets as it restores supply to markets after drastic cuts in 2020, and the United States is more than a million barrels short of its record level of daily output. 

According to the HSBC Securities and Capital Markets report, the near-term outlook deteriorates demand in Aviation that could remain soft, while recovery in the following quarter will depend on the virus and as Omicron spreads. Domestic traffic has fallen by over 45 per cent in the last 10 days. 

“We forecast a Rs 310 net loss at Indigo and Rs 170 billion loss at Spice Jet; on a sequential basis, the numbers should be much better. However, the key issues will be the trading environment and capacity outlook, neither of which looks too optimistic at present,” the brokerage added. 

At around 02:15 pm IST, Brent Oil is trading above $88 per barrel, while Crude Oil WTI is above $87 per barrel on Thursday.