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Financial Opportunities Forum: December 10, 2015
Airline stocks have not delivered decent double digit returns for investors.
However, there are exceptions to this trend. Many factors do affect the profitability of airline companies and one needs to evaluate on many parameters.
One such case which fits the bill in the current Indian context is Indigo airlines. It is the lowest cost per sear carrier and has the highest operational efficiency. Indigo fares better in terms of profitability and cost efficiency compared to Jet airways, Spice jet and go air.
A similar case history is South west airlines in the overseas market. It gave a compounding return of 30.6% per annum for 5 years. There are certain companies and markets, in which these airline companies perform.
Currently with crude at multi-year lows, the ATF prices are very favorable to these airline companies. Therefore, the case to track airline companies is compelling, but whether to invest with conviction is yet to be seen.SHOW LESS