25th Oct 2018.
Shares of InterGlobe Aviation Ltd, owner of India’s largest airline by market share – IndiGo, fell as much as 3.7% today, a day after the company posted its first-ever quarterly loss since its market debut in 2015. Is it a wake – up call or an alarm? Observers wonder. The stock is witnessing selling pressure now. More than 1.2 million Shares of InterGlobe Aviation traded hands, as of 10:07 IST, compared with their 30-day average of 1.6 million shares.
Shares of InterGlobe Aviation have plunged more than 30 percent so far this year amid intense competition.
The Company’s Chief Executive Officer Rahul Bhatia had to come up with clarifications like “higher crude oil prices and a depreciating rupee have dented Indian airlines’ profit in the world’s fastest-growing aviation market.”
When higher fuel costs and a weak rupee slashed third-quarter earnings miserably, the Company says it is responding by growing more slowly, cutting unprofitable flights and delay taking new planes.
InterGlobe has been able to sustain itself so far, but yesterday its employees were emailed to bear with the situation by none other than the CEO. (See: IndiGo urges)
Rival airlines also took a hit today, with Jet Airways shares falling up to 2.4%, while SpiceJet Ltd slipping as much as 3.14%.
Jet Airways Ltd is scrambling to keep itself afloat. More than 80 days ago, its Chairman has said that the Company has only 60 days of steam left. Thereafter, it saw its planes being grounded one after another. Its shares saw 156-week lows. The company defaulted in salary payments and pink slips started being given. (See: Will Jet collapse).
Both Jet and IndiGo have been guilty of unfair business practices. (See: Unfair)
State-owned Air India is surviving on government bailout.
Uncertainty has led InterGlobe to hold its decision to own some Airbus A320neo aircraft. “At times when there is a little uncertainty we want to be prudent with cash,” its interim Chief Executive Officer Rahul Bhatia said on a post-earnings analyst call on Wednesday. The company will continue to lease them, he added.