Airline stocks heading for higher altitude

Robust passenger growth traffic in Feb, weakening dollar and lower crude oil prices are reasons

Aviation stocks shot up between 4.5 per cent and11 per cent on Thursday on tailwinds that include robust passenger growth traffic in February month, a weakening dollar and lower crude oil prices. Fuel, maintenance, lease costs are dollar denominated and any weakness in the greenback versus the rupee benefits airlines. The benign cost environment, according to ICICI Securities, has received fresh impetus with crude oil and dollar declining by 10 per cent and 4 per cent, respectively so far in 2017.

Ansuman Deb of ICICI Securities believes that currency is the biggest variable in earnings sensitivity for airlines and sustained strengthening