IndiGo & SpiceJet – Vultures circling?

The ongoing struggle for survival at Jet Airways seems to have given a leg-up to the stocks of its listed rivals — IndiGo Airlines and SpiceJet. Over the past week, the IndiGo stock was up 10 per cent while SpiceJet was up nearly 26 per cent. In contrast, the already beaten down Jet Airways stock lost a further 4 per cent.

The vultures may be circling. With scores of Jet’s aircraft being grounded and the crisis at the airline intensifying by the day, the market seems to be sensing that consolidation in the aviation industry could be on the cards.

This could benefit stronger players, including IndiGo and SpiceJet that could gain from a shift in passenger traffic from Jet and better pricing power. Also, IndiGo that has cancelled many flights due to a shortage of pilots could recruit from Jet’s ranks. Besides, SpiceJet whose Boeing 737 Max 8 aircraft have been grounded could eye some of Jet’s other grounded aircraft to keep its show going.

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