Aviation stocks skid after ATF duty hike
Aviation stocks on Thursday lost up to five per cent after the Union government hiked import duties on aviation turbine fuel (ATF).
The Centre on Wednesday imposed a five per cent customs duty on ATF as part of its effort to check the widening current account deficit (CAD) and protect the rupee that had been under pressure against the dollar.
Though only a small portion of ATF is imported, observers fear the move will lead to higher domestic prices as it is sold at import-parity rates. The duty hike on ATF comes at a time airlines are struggling with rising crude oil prices and a depreciating rupee even as they are unable to pass on the increased costs to consumers.
While shares of InterGlobe Aviation lost 1.61 per cent to close at Rs 839.15, budget carrier SpiceJet ended nearly two per cent lower at Rs 68.05.
The Jet Airways counter was the worst-hit, plunging nearly five per cent. Reports of the airline delaying part payment of August salaries to pilots and senior management personnel also made the Jet counter jittery.
The stock tanked 4.82 per cent to close at Rs 182.65 on the BSE. Intra-day, it dived 9.77 per cent to Rs 173.15 — its 52-week low. On the NSE, the Jet shares slumped 4.60 per cent to Rs 183.20.
In terms of equity volume, 10.56 lakh shares of the company were traded on the BSE and over one crore shares changed hands on the NSE.
Jet Airways has reportedly told its pilots, aircraft maintenance engineers and senior management team that part of their August salaries will be paid by October 9.
On September 6, the full service airline told senior employees that salaries would be paid in two installments till November.
This lower close in aviation stocks came on a disappointing day for investors after the US Federal Reserve hiked interest rates and struck a hawkish stance amid rising crude oil prices.
The BSE Sensex tumbled 218.10 points to 36324.17, while the NSE Nifty dropped 76.25 points to finish below the 11000-mark. Foreign portfolio investors sold shares worth Rs 809.95 crore on Wednesday.