SpiceJet trades lower for fifth straight day, hits eight-month low

Topics SpiceJet | Buzzing stocks

Shares of SpiceJet were trading lower for the fifth straight session, down 2.5 per cent at Rs 96.85 on the BSE on Friday in an otherwise firm market. The stock of India’s second biggest airline in terms of market share was quoting at its lowest level since April 11, 2019.

In the past six days, SpiceJet's share price has slipped 7 per cent after Boeing announced last week that it would suspend producing 737 Max planes as the certification process of the safety of these planes by the Federal Aviation Administration would move into 2020. In comparison, the S&P BSE Sensex was up 1.8 per cent during the same period.

“Boeing’s decision to halt 737 MAX productions could impact India’s aviation sector in many ways. In the end of 2016, SpiceJet had firmed up orders for 205 new planes from Boeing with 155 of them being 737 MAXs. Boeing’s decision to suspend production could trouble SpiceJet’s aggressive fleet expansion plans,” Business Standard reported. CLICK HERE TO READ FULL REPORT.

On December 13, SpiceJet informed the stock exchanges that it has grounded three of its B737 freighter aircraft on the advice of the Israeli Aerospace Industries (“IAI”), which converted these aircraft to freighters. These aircraft will return to operations after regulatory clearance, it said.

However, since November 13, the stock has underperformed the market by falling 15 per cent, after SpiceJet reported a higher-than-expected loss of Rs 460 crore due to the adverse impact from the grounding of the 737 MAX planes as well as seasonality. The management said "the continued grounding of the 737MAX has hit our growth plans adversely and resulted in inefficient operations and as a result, increased in costs".

The stock has now slipped 38 per cent from its 52-week high level of Rs 157, hit on June 3, 2019. In comparison, the S&P BSE Sensex was up 3 per cent during the same period.

 


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