New Delhi: Shares of Indian airline companies dropped sharply on Friday, mainly because of two big reasons: rising crude oil prices and the negative mood after the deadly Air India plane crash.
IndiGo’s shares went down by as much as 4.04 percent to Rs5,256 each, while SpiceJet’s shares fell 1.68 percent to Rs43.93 on the BSE. This was the second day in a row that both airline stocks fell, with IndiGo having its worst trading session since April 25 and SpiceJet seeing its biggest drop since May 6. However, both stocks recovered a bit after the morning session. at 2:17 PM, IndiGo and SpiceJet were still down 4.04 percent and 1.68 percent respectively, compared to a 0.73 percent drop in the main BSE Sensex.
One of the main reasons for this drop is the surge in crude oil prices. Tensions in West Asia have gone up after Israel launched airstrikes on Iran, targeting nuclear sites and top scientists. Brent crude prices jumped over 9 percent to $76 per barrel, while WTI crude also saw a similar rise. This is the biggest weekly gain for oil since 2022, and higher oil prices mean higher costs for airlines, which hurts their profits.
Investor confidence was already low after the Air India crash. The London-bound Air India flight, a Boeing 787 Dreamliner, crashed soon after takeoff from Ahmedabad on Thursday. The crash killed more than 240 people, including 169 Indian nationals, 53 British, 7 Portuguese, and 1 Canadian. The plane hit a building housing medical students, adding to the tragedy. Only one passenger survived and is being treated in hospital.
The flight was piloted by Captain Sumeet Sabharwal, who had 8,200 hours of flying experience, and First Officer Clive Kundar, with 1,100 hours. The crew issued a distress call just after takeoff, but lost contact soon after. The crash site was engulfed in flames, making rescue very difficult.
This disaster is a major blow to Air India’s efforts to become a world-class airline and modernize its fleet. The company has faced many challenges in the past, including other crashes and delays, but this is its worst crisis in a decade. Even global aviation stocks took a hit, with Boeing’s shares dropping sharply, along with other aviation companies.
The cause of the crash is still unknown, but technical problems cannot be ruled out. India’s aviation regulator, DGCA, has ordered a detailed investigation, and Boeing has said it will fully cooperate with Indian authorities during the probe.
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