Weak rupee harms airlines' stocks

New Delhi: A turbulent share market did not augur well for private Indian carriers as their equities tanked as much as 8 percent on the BSE in September so far as a weak rupee put pressure on their operating margins.

As the BSE Sensex went topsy-turvy on concerns over a weak global economic recovery and deepening of the crisis in the Eurozone, the stocks of aviation companies too went into a tailspin.

So far in September, shares of Jet Airways have fallen 7.73 percent to Rs 259.90 a share and that of Kingfisher dropped by 6.63 percent to Rs 24.25 apiece. Spicejet shares fell 5.15 percent to Rs 23 on the BSE.[caption id=“attachment_91917” align=“alignleft” width=“380” caption=“Hard times for Kingfisher Airlines. Reuters”] [/caption]

According to experts, the movement of rupee impacts operational expenses of aviation companies as payments for leasing or purchase of aircraft, fuel purchased abroad, spares and other things are generally made in dollars.

So far this month, the rupee has weakened by 418 paise to a 28-month low of Rs 49.90 per US dollar. At the beginning of September, it was Rs 45.72 against a US dollar.

Treasury managers said the unless Europe is stabilised, rupee in the medium term may touch the sensitive Rs 52 a dollar mark, if not breach this level.

In the last four trading sessions, rupee has declined by 231 paise or 4.89 percent against dollar. Experts say the aviation stocks could see further sell off pressure in the coming weeks.

Besides, the BSE benchmark Sensex tumbled by 772 points or 4.57 percent to 16, 162 level last week.

PTI