Indian airlines to return to profit in FY2014: Merrill

 

Reuters Market Eye - Bank of America-Merrill Lynch upgrades Jet Airways and SpiceJet to "buy" from "underperform", saying improving industry trends such as signs of ticket price hikes and reduced capacity will improve profitability.

* "This should see these carriers substantially lower their losses in FY13 and return to profit in FY14," Bank of America-Merrill writes in a report dated on Monday.

* The investment bank has also increased its price target on Jet to 480 rupees from 210 rupees, while raising SpiceJet's to 42 rupees from 21 rupees.

* The unexpected profits posted by Jet and SpiceJet last week have raised hopes for a turnaround in India's ailing airline industry after its carriers lost a combined $2 billion last year.

 

* Jet Airways shares gain 0.8 percent to 377.30 rupees, while SpiceJet gains 2.7 percent to 32.60 rupees.