Oil rose on Wednesday, touching $90 a barrel for the first time in seven years, as tight supply and rising political tensions between Russia and Ukraine added to concerns about further disruption in an already-tight market.
Global political tensions have added to worries about an already tight energy market. OPEC+ is having trouble meeting monthly production targets as it restores supply to markets after drastic cuts in 2020, and the United States is more than a million barrels short of its record level of daily output, the news agency Reuters reported.
Meanwhile, shares of SpiceJet slipped below its previous low of Rs 59.40 touched on April 22, 2021. In the past one month, the stock has declined 12 per cent, as compared to 1 per cent fall recorded by the S&P BSE Sensex. Shares of InterGlobe Aviation dipped 11 per cent in the past one week.
For the first half (April to September) of the financial year 2021-22 (H1FY22), SpiceJet had reported a consolidated net loss of Rs 1,301 crore, as against a loss of Rs 706 crore in H1FY21. InterGlobe Aviation had posted a consolidated net loss of Rs 4,610 crore as against a loss of Rs 4,039 crore in the same period year ago.
The potential risks and challenges for the sector include subdued travel demand due to fresh lockdowns imposed by Government to curb new variants of the pandemic; increase in oil prices and adverse exchange rates; high competition from new entrants and consolidation emerging from divestment of national carrier; talent crunch and unfavourable government regulations.
“Continued restrictions imposed by India or other countries to prevent newer outbreaks may impact the international network expansion plan of SpiceJet and result in financial losses,” the company said in financial year 2020-21 (FY21) annual report.
Analysts at Elara Capital believe strong FY23/24 GDP growth would continue to prop domestic passenger demand, even as the sector may face challenges given Air India privatization, Jet Airways revival and Akasa Air start-up.
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