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Indigo Shares Witness Profit Booking As Airline Stocks Remain In Focus

The airline gained over four percent in Monday morning trade after it announced resuming Boeing 737 Max flight operations by the first week of October.

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The shares of InterGlobe Aviation, the parent company of IndiGo, surged as much as 14 percent last week, touching a fresh 52-week high of Rs 2,243 on Friday. However, the shares witnessed profit booking on Monday, as they slid over 1.5 percent. 

Regardless, experts suggested remaining invested in the stock for a while.

“Stay invested in IndiGo, if you have it, from lower levels because risk-reward is decent enough, but I would expect the stock to go through a bit of consolidation before the next big move that some of the brokerages have spelt out,” Prakash Diwan, a market expert said.

Aviation stocks were in focus on Monday after the government allowed airlines to operate flights at 85 percent of pre-pandemic levels, up from 72.5 percent earlier.

Shares of SpiceJet, the second-largest private airline has also surged 17 percent last week. The airline gained over four percent in Monday morning trade after it announced resuming Boeing 737 Max flight operations by the first week of October.

Sources told CNBC-TV18 that two SpiceJet lessors have agreed to write-off around Rs 300 crore of lease rental dues, while settlement talks with other lessors are at an advanced stage.

Earlier, the flight capacity was curtailed after the coronavirus outbreak in the country. It was later raised to 80 percent in December, however, after the second wave of COVID-19, the airline watchdog reduced the capacity to 50 percent.

As the second wave of the pandemic ebbed in the country, DGCA had increased the flight capacity to 65 percent and then to 72.5 percent in August.

Consequently, India’s August air traffic rose 34 percent from July as over 67 lakh passengers travelled via air. Airlines’ passenger load factor also rose in August, for Indigo it was about 74 percent as against 66.2 percent in July. SpiceJet saw its passenger load factor rising to 79.6 percent from 74.6 percent.

Passenger load factor is a measure of how much of an airline’s passenger carrying capacity has been utilised. A higher measure means there are fewer empty seats in the aircraft.

(PTI)


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