Sector consolidation likely to benefit IndiGo and SpiceJet; stocks gain

Given multiple headwinds and weak financials, the situation may worsen for Jet Airways

Despite the weak macro environment and severe competitive intensity in the aviation sector, Interglobe Aviation (IndiGo) and SpiceJet stocks gained 3.5–6.5 per cent over the last two trading sessions. On the other hand, delay in announcing its June quarter results and a stretched balance sheet saw Jet Airways share price shrinking over 11 per cent last week. 

While headwinds in the form of high oil prices (and hence, air turbine fuel), weak rupee and competitive pressures remain, the gains for IndiGo and SpiceJet, according to analysts, are on the expectation of sector consolidation. Investors and analysts believe any industry consolidation