Aviation shares up ahead of PM meet with airline chiefs

Shares of the three listed air carriers -- Kingfisher Airlines, Jet Airways and SpiceJet -- today soared higher on the bourses, ahead of a meeting between Prime Minister Manmohan Singh and the airline chiefs tomorrow.

The rally in the aviation stocks was in sharp contrast to a broader downtrend in the stock market, where the benchmark Sensex fell more than 1% to 15,695.43 points.

Shares of Vijay Mallya-led Kingfisher Airlines, which have been battered heavily in the recent weeks on funding woes, rose 7.75% to close at Rs 27.10.

Earlier in the day, the stock had scaled its highest level in a month at Rs 27.75 -- marking a significant surge from an all-time low of Rs 17.55 hit on November 11.

Jet Airways was the biggest gainer among the three listed aviation companies with a surge of 12.6% in its share price to Rs 278.70. The stock scaled a monthly high of Rs 281.40 during the intra-day trade.

The third listed airline, SpiceJet, also saw its stock closing 8.12% higher at Rs 23.30, after hitting a one-week high of Rs 23.85 during the intra-day trade.

The experts attributed the surge in aviation stocks to the hopes that some favourable policy changes for the sector might be discussed during the Prime Minister's meeting with the chiefs of all Indian airlines tomorrow.

Civil Aviation Minister Vayalar Ravi this morning said that the air carriers had sought a meeting with the Prime Minister.

"Prime Minister was good enough to give time for it (meeting) and he is meeting them," Ravi told reporters.

Ravi noted that the airline sector running at loss was posing a "problem".

"PM is concerned about it, it's the major institution of connectivity, supporting the development of the country," he added.

Earlier on November 12, Singh had said that the private sector airlines should be managed efficiently, "but if they do get into difficulties, we have to find ways and means to help them get out of the process."

While talking to reporters today, Ravi declined to take questions about any special package for the airline industry.

To a query about moves to go for Foreign Direct Investment (FDI) in the aviation sector, the minister said he cannot make any comments since Parliament is in session.

The Industry Ministry has moved a draft Cabinet note on allowing 26% FDI by foreign airlines in the domestic carriers.

"Private airlines in the country are in dire need of funds for their operations and service upgradation to compete with other global carriers," the note circulated by the Department of Industrial Policy and Promotion (DIPP) said.