KINGFISHER AIRLINES SHUTDOWN WILL LEAD TO FURTHER CONSOLIDATION IN THE INDUSTRY: REPORT
New Delhi,India : Indian Airlines are seen posting a sharp recovery in the third quarter mainly on the back of a stronger rupee and capacity rationalisation due to the grounding of Kingfisher BSE -0.44 % Airlines, according to a Bank of America Merrill Lynch report.
The report said the onset of the busy season will improve utilisation and yields while the grounding of debt-laden Kingfisher AirlinesBSE -0.44 % will lead to further consolidation in the industry.
"While we expect weak Q2 FY13 results on account of seasonality, we could see a sharper than expected recovery in the seasonally strong Q3," it said.
According to Merrill Lynch, concerns over the Indian currency have eased for now as the rupee has appreciated 6% versus the dollar over the past five weeks. "A significant portion of domestic airlines' costs are US$ denominated and each 1% appreciation in the rupee improves FY13 E EBITDAR by 0.4%, 1.8% for Jet AirwaysBSE 2.29 % and SpiceJet, respectively. Appreciating rupee will also have an indirect impact through the prices of domestic fuel."
13/10/2012 : Anindya Upadhyay / The Economic Times.
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